Appeal Brief

STATE OF MICHIGAN

IN THE COURT OF APPEALS

 IN RE DETROIT EDISON COMPANY
APPLICATION TO RAISE RATES AND
FOR OTHER RELIEF                                                   Court of Appeals No: 319194

___________________________________________________________

DAVID SHELDON

Appellant,

v.

MPSC Case No: U-15768

MICHIGAN PUBLIC SERVICE COMMISSION                     (on remand from COA,

Appellee,                                                                      File No. 296374)

and

DETROIT EDISON COMPANY

Petitioner, Appellee.

____________________________________________________________

 

DAVID SHELDON                                                     MICHIGAN PUBLIC SERVICE COMM.

Appellant, In Proper Person                                    By: Patricia S. Barone (P29560) and

215 West Troy #4004                                            Spencer A. Sattler (P70524)

Ferndale, MI 48220                                            Telephone: (517) 241-6680

(248) 604-7545

DTE ELECTRIC COMPANY

(f.k.a.Detroit Edison Company.)

By: Michael J. Solo (P57092)

Telephone: (313) 235-9512

____________________________________________________________

 

 

 

 

APPEAL BRIEF OF DAVID SHELDON

 

PROOF OF SERVICE

 

 

 

 

 

ORAL ARGUMENT NOT REQUESTED

 

STATEMENT OF ORDER BEING

APPEALED FROM AND RELIEF BEING SOUGHT

 

 

Presently pending before this Court is an appeal brought by David Sheldon, in proper person, from an October 17th, 2013 Order (Appendix A) of the Michigan Public Service Commission under it’s reopened general rate Case U-15768. Only that portion of the case concerning funding for Detroit Edison’s AMI metering technology, aka “smart meters” had been reopened pursuant to the remand Order from this Court. The Order being appealed from allowed Detroit Edison to proceed with general deployment of AMI meters and pass the costs of same on to its customers.

Appellant sought to intervene in the remanded and reopened general rate case in order to present evidence concerning the health and privacy harm that this general deployment of AMI meters is causing. Appellant was denied the opportunity to participate in this reopened case and was advised that the issues he intended to pursue were “outside the scope” of the reopened case.

Appellant seeks a determination from this Court that the Commission has clearly defied the remand Order and a decision reversing the Commission’s decision that approved funding for a general deployment of AMI meters, an Order that Detroit Edison must refund to customers the $8.1 million dollars in rate increase that it was incorrectly awarded by the Commission, and must remove the $37 million dollars from its capital rate base that was also awarded incorrectly by the Commission.

 

 

i

TABLE OF CONTENTS

 

STATEMENT OF ORDER BEING APPEALED

FROM AND RELIEF BEING SOUGHT ……………………………………….                 i

 

INDEX OF AUTHORITIES ……………………………………………………….                   iv

 

STATEMENT OF JURISDICTIONAL BASIS ……………………………….   v

 

STATEMENT OF QUESTIONS PRESENTED ………………………………   vi

 

STATEMENT OF FACTS …………………………………………………………                 1

 

Introduction …………………………………………………………………       1

 

Background ………………………………………………………………….      5

 

The Harm the Meters Cause …………………………………………..    7

 

Procedural History ……………………………………………………….            11

 

  1. IN CLEAR VIOLATION OF THE REMAND ORDER OF

THIS COURT, THE SCOPE OF THE REOPENED

PROCEEDING WAS LIMITED TO ONLY THE QUESTION

OF RATES ……………………………………………………………………  16

 

Standard of Review ………………………………………………………            16

 

Discussion ……………………………………………………………………  17

 

  1. THE COMMISSION COMMITTED HARMFUL ERROR

IN DENYING INTERVENER STATUS TO THIS APPELLANT

AND TO SEVERAL OTHERS WHO PETITIONED IN THE

REOPENED PROCEEDING ……………………………………………                20

 

A. Issue – Timeliness of Petition. …………………………………..                 20

 

Standard of Review ……………………………………………..     20

 

Discussion ………………………………………………………….  21

  1. Issue: Denial of the petitions of Appellant and others

was not harmless error.

 

Discussion ……………………………………………………….                       25

ii

III.            APPELLANT HAS STANDING TO BRING THIS APPEAL

Standard of Review ……………………………………………………          28

 

Discussion …………………………………………………………………..   29

 

  1. COMMISION, ACTING ON WRITTEN COMPLAINTS, HAS

JURISDICTION TO CONSIDER HEALTH & PRIVACY:

 

Standard of Review ………………………………………………………                   33

 

Discussion ………………………………………………………………….    36

 

CONCLUSION ……………………………………………………………………. 37

 

RELIEF REQUESTED ………………………………………………………….             39

 

PROOF OF SERVICE

 

APPENDIX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iii

INDEX OF AUTHORITIES

 

Case Law                                                                                                                 Pages

 

Consumers Power Co v. Michigan Public Service Commission,

       460 Mich. 148, 596 N.W.2d 126 (1999) ……………………………………………        34

 

Electric Transmission Act of 1909,

P.A. 106, MSA 460.551 et seq ……………………………………………………….                  33

 

Federated Insurance Company v. Oakland County Road Commission,

           475 Mich. 286, 715 N.W.2d 846 ………………………………………………….. 28

 

In re Application of Detroit Edison

Company to Raise Rates,

MCOA (published) Case # 296374 ……………………………………………….      2

 

Huron Portland Cement Co v. Michigan Public Service Commission,

351 Mich. 255, 88 N.W.2d 492 (1958) ……………………………………………..      34

 

In Re Freeman Estate,

218 Mich App 151, 154-155, (1996) ……………………………………………….    28

 

Michigan Public Service Comm Act,

         Section 6 of Act No. 3 of the Public Acts of 1939 ……………………………… 33

 

Public Utilities Commission Act, P.A. 419 of 1919 ……………………………………                  35

 

Railroad Commission Act of 1909, P.A. 300 …………………………………………..         34

 

Union Carbide v. Public Service Commission,

         431 Mich. 135, 428 N.W.2d 322 (1988) …………………………………………..         34

 

Statutes and Rules

 

MPSC Rule 460.17201 (Rule 201) ………………………………………………………..                 21

 

Administrative Procedures Act (Act 306 of 1969) ………………………………….                  23

 

MPSC Rule 460.17305 (Rule 305) ………………………………………………………..                 23

 

MCR 7.203(A)(2) ……………………………………………………………………………….           28

 

Other

Michigan Court Rules Practice (3d ed, 1992), ………………………………………             29

STATEMENT OF JURISDICTIONAL BASIS

 

Pursuant to Michigan Constitution, Article 6, Section 28 and MCR 7.203(A)(2), this Court has jurisdiction to hear an appeal as of right of a decision of a state administrative agency.

The Order appealed here was issued on October 17th, 2013. This Court has jurisdiction to hear this appeal since it was filed on November 15th, 2013, within 30 days of the Order appealed from pursuant to MCL 462.26.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v

STATEMENT OF QUESTIONS PRESENTED

 

  1. WAS IT A CLEAR VIOLATION OF THE REMAND ORDER OF THIS COURT, FOR THE SCOPE OF THE REOPENED PROCEEDING TO BE LIMITED TO ONLY THE QUESTION OF RATES?

 

Appellant answers:   “Yes”

Appellees answer:     “No”

 

  1. DID THE COMMISSION COMMIT HARMFUL ERROR IN DENYING INTERVENER STATUS TO THIS APPELLANT AND TO SEVERAL OTHERS WHO PETITIONED IN THE REOPENED PROCEEDING?

 

Appellant answers:   “Yes”

Appellees answer:     “No”

 

III.     DOES APPELLANT HAVE STANDING TO BRING THIS APPEAL?

 

Appellant answers:   “Yes”

Appellees answer:     “No” (presumably)

 

  1. DOES THE COMMISION, ACTING ON WRITTEN COMPLAINTS, HAVE JURISDICTION TO CONSIDER HEALTH & PRIVACY OF UTILITY METERS?

 

Appellant answers:   “Yes”

Appellees answer:     “No” (presumably)

 

 

 

 

 

 

 

 

 

vi

STATEMENT OF FACTS

 

Introduction. Presently pending before this Court is an appeal brought by David Sheldon, hereafter referred to as “Appellant”, from an October 17th, 2013 Order (Appendix A) of the Michigan Public Service Commission (MPSC) under it’s reopened general rate case Case U-15768. Only that portion of the case concerning funding for Detroit Edison’s AMI[1] technology, aka “smart meters” had been reopened pursuant to the remand order from this Court.

Throughout this brief Appellant will identify the utility as “Detroit Edison” in keeping with the designation in the original case, the remand Order, and the reopened case. It should be noted that the utility’s name was changed to “DTE Electric” in January of 2013.

Appellant complains of a decision that allowed Detroit Edison to begin general deployment of a new metering technology at the expense of its customers. Appellant brings this case both as a customer of Detroit Edison and as a member of the public whose environment and quality of life may be diminished by the actions of the utility.

Appellant does not intend to analyze the details of Detroit Edison’s cost/benefit model, but rather to argue that the model is largely irrelevant if it does not take into consideration ALL the known costs, including the costs to customer privacy and to the environment. Only when these costs are quantified into the model will the model become relevant. Appellant argues that until that is done the Company has not met its burden.

The original decision in this general rate case was announced on January 11th, 2010 (docket entry #379). Both the Attorney General and ABATE appealed. The case was reversed in part and remanded in part by this Court.

This Court, in Case No. 296394, provided in it’s Order of April 12th, 2012, the scope this reopened case was to have. The Court concluded the AMI section of it’s decision with these words:

“… we remand this matter for the PSC to 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 AMI, and projected effects on rates. In other words, a real record, with solid evidence, should support whatever decision the PSC makes upon remand. “ (Emphasis added)

 

The disagreements between appellant and the adverse parties in this appeal concern (1) the interpretation of the above language from the remand order and (2) who should be entitled to participate in the reopened case and introduce evidence. The Commission’s Order reopening the case did not specify what the scope should be other than to refer to the very general language above.

The Commission’s final Order (supra) on the reopened case, from which appeal is taken, supported decisions made by the Administrative Law Judge (ALJ) concerning the above two issues. The ALJ handling the reopened case took the position advanced by Detroit Edison that all of the remand language (supra) referred to the purely financial costs and risks of the AMI metering program, and these costs and risks only from the utility’s point of view. Accordingly the holding was that any consideration of whether these new meters would impose a burden or a risk on customer’s health or privacy was entirely “beyond the scope” of the remand.

The ALJ also took the position, advanced by Detroit Edison, that there could be no new interveners participating in the case who were not part of the original case. This resulted in Appellant and several other petitioners being denied the opportunity to participate.

Appellant and two other petitioners filed on October 22nd, 2012, within the time allotted by MPSC rules, an “Application to Commission for Leave to Appeal” the above decisions (Appendix B, docket entry #458), arguing that:

  • (a) there was no law or agency rule that would justify a blanket exclusion of new interveners at the preliminary hearing of a newly reopened case, and
  • (b) that the original Notice of Hearing on this case was so defective with regard to the AMI issue that simple justice would argue in favor of allowing new interveners in the remand case as they had been effectively excluded from the original proceeding, and
  • (c) that the ALJ’s ruling on scope of the reopened case was in clear violation of the remand Order of this Court.

The Commission denied the Application (docket entry #462 on December 6th, 2012).

Detroit Edison and those of its customers who have expressed disagreement with the AMI program do not agree on the privacy dangers posed by the AMI meters. Those filing complaints state, on the basis of the “load profile” information admitted by the company (see section title “Harm of the Meters”), that these AMI devices give the utility the means to know, in detail, not only the total amount of electricity being used at any given moment, but, more particularly, what kinds of appliances are being used at any given time.

Detroit Edison, on the other hand, often states that such detailed information would only be available where the customer has purchased “smart appliances” and/or where the customer has signed up for “voluntary” programs to conserve energy. The utility has publicly stated on a number of occasions that it has never sold its customers’ private information and would not do so in future.

Detroit Edison and those of its customers who have complained about the microwave radio transmissions disagree on whether or not these radio transmissions present any threat to the health of utility customers or more generally to the occupants of affected homes and businesses in Edison’s service territory, whether or not they are customers of record. Those asserting complaints cite the dangers they claim have been reported by virtually all independent[2] scientists and medical people who have studied the subject. Many of them also cite their own anecdotal experiences with deteriorating health following the installation of a smart meter on their own homes. A partial list of symptoms reported by them includes heart palpitations, mental confusion, and inability to sleep at night.

The fact that the AMI devices also contain a radio receiver and a disconnect switch allows the utility to remotely turn off a customer’s power when, for example, a bill has not been paid, or upon request of police or fire responders. This has been viewed as a benefit by the utility but is seen as posing a potential for abuse by those filing complaints. They question what will happen when medical equipment needed for life support is turned off remotely by mistake or as a result of some computer malfunction.

Another area of disagreement centers on plans for most appliances in the future to contain “smart chips”. These chips, when combined with the radio receiver in the AMI device, will allow a utility to monitor and/or turn off particular appliances within a home in order to balance its load during periods of peak demand. Such programs are called “demand response” programs by the utility industry and are seen as a benefit by the industry, but seen as a threat to homeowner autonomy by many of those who have filed complaints.

Background. Detroit Edison is currently in the process of converting all customers in its service territory to AMI electric meters, a.k.a. “smart meters”. This has come about as a result of federal legislation promoting a “smarter grid”, specifically the “Energy Policy Act of 2005”, the “Energy Independence Act of 2007”, and Obama’s stimulus bill of 2009. It is noteworthy that all these federal laws encouraged the idea of “smart meters” but also stipulated that these meters were to be voluntary, that utilities were to offer smart meters to their customers as part of programs to give customers incentives to conserve energy.

For 100 years, whenever the public demanded more energy, the job of the utilities was to supply that increased demand. There now appears to be a new way of thinking, based in part on the idea of “global warming” and in part on the need to achieve independence from mideast oil, that our society must find ways to dampen demand down to what the available supply is, minimizing the need for new power plants. These goals were articulated, respectively, in the federal laws above cited. Because the demand for new power plants depends greatly on peak load, it will be important, it is said by advocates of the new thinking, to shift consumption of electricity to off peak hours to better utilize existing generator capacity. It is not at all clear that the public buys into these new concepts or, indeed, was ever really consulted about this new direction.

The implications of the new thinking are that some form of rationing may be needed. There may be limits imposed on the total amount of electricity a home or business is allowed to consume, and especially limits on how much energy can be consumed during peak load hours. Efforts will be made to cause customers to shift some of their consumption to off peak hours for, by for example, charging a lower rate per kilowatt hour to customers who run their dishwasher or laundry machines after 9 pm.

A prime purpose of “smart meters” is to have a way for utilities to know exactly how people are using electricity and to use “time-of-use pricing” to encourage shifting demand to off peak. Where such an incentive fails to change behaviors sufficiently, the “smart appliances” soon to come will give utilities the means to simply turn off particular appliances deemed to be unnecessary during times of peak load. Such practices are part of a utility industry policy known as “demand-response”, though we are generally told that such programs will be “voluntary”. Detroit Edison asserts that another purpose of these new meters is to provide rapid detection of outages after a storm. Still another purpose is to eliminate the costs of manual meter reading.

One of the major consequences of smart meters is that utilities accumulate much detailed information about the daily habits of their customers and this information is all to be stored in a database. There is ongoing controversy about whether utilities should be allowed to sell this information to third parties such as marketing companies, insurance companies and banks, for example.

A central contention of Detroit Edison has been that all the data it collects will be encrypted, both in transmission and in storage, and that it has no plans to sell such information to third parties.

The opposing contention of many customers of Detroit Edison is that the utility has not demonstrated, through any evidentiary hearing, that it actually needs such detailed information about each individual customer in order to perform its core function, which is to supply electric power. Further, that where no need has been demonstrated that it has no right to collect such information without customer consent, or to make the collection of such information a condition of service, and that customers should in no way be dependant on the promises of a utility about what uses it will put to such information in the future.

If, as a society, we stick to concepts such as the sanctity of the home and the Fourth Amendment protections our founders devised to protect us in our homes and in our persons and personal effects, then there is no place for this type of data collection.

The Harm the Meters Cause.

The complaints above centered mainly on four aspects of the AMI meters: (a) their ability to record electrical usage within a home or building in great detail[3], and (b) the fact they use microwave radio transmitters to relay electrical

usage information to the utility in real time, (c) the fact that AMI meters and other types of “digital” or electronic meters utilize something called a “switched mode power supply” to convert 120 volts a.c. or 240 volts a.c. to a relatively low d.c. voltage to operate the electronics, and (d) the fact that radio receivers in the AMI meters allow the utility to remotely turn off service entirely or to send signals to a home or business to turn off particular appliances during, for example, peak load hours.

Appellant argues that the company’s position stated in the footnote below, that “customer specific data” is never transmitted by the meters, is disingenuous. In fact the meter identification number is necessarily transmitted in order that the company can bill the customer. The company then uses that meter identification number to match the load profile data sent by the meter with all the rest of the customer’s account in order to bill. But that also puts the company in a position to transfer the data to third parties, including interested buyers and law enforcement, with full identification of individual customers. The public is asked then to trust that Edison would never do that, even though it is being done by utilities in other states, notably California.

Appellant argues that the foregoing claims are well documented in a report of the National Institute of Science and Technology (N.I.S.T.), part of the U.S. Government, where such load profile graphs are presented and explained in some detail.[4] See excerpts from NISTIR Report No. 7628, attached as Appendix C to this brief. A key policy recommendation of this report, which may be found in the foregoing appendix, is:

“• Choice and Consent. An organization should clearly, fully, and accurately describe the choices available to individuals, and to the extent practicable, obtain explicit approval for the collection and use of their personal information. Consumers should have the option to forgo data collection and services that are not related to the core services provided by the organization.”

 

A second area of dispute between Detroit Edison and the hundreds of customers who filed written complaints concerns the microwave radio frequencies bathing whole neighborhoods. Detroit Edison has publicly stated that the amount of electromagnetic radiation caused by their radio transmitters falls well within limits established as safe by the F.C.C.[5] The company, as well as the MPSC, also cite studies done by industry-funded laboratories that fail to show any correlation between health symptoms and radiation at the levels used in these devices.

But customers who complain are relying on the judgment of nearly every independent scientist who has examined this issue. Nearly all of them state that the FCC standard is nearly 30 years old and is largely irrelevant to the kinds of harm caused by smart meters and cell phones. These standards were based on the amount of radio energy that it takes to cause heating of human skin of a 200 pound male in an industrial situation. They were never intended to protect against unremitting 24/7/365 exposures, or to protect against non thermal effects, particularly for children or for vulnerable adults.

A third area in which Detroit Edison differs from the hundreds of its customers who have filed written complaints concerns the relatively low frequency electro-magnetic radiation caused to emanate from a home’s wiring when a meter containing a switched mode power supply is attached to the home. The significance of this issue is that complaining customers say that even the so called “opt-out” meter now being offered to customers causes illness because of this issue.

Detroit Edison has never acknowledged that such power supplies present any problem at all. Those asserting complaints assert that power supplies of this type cause harmonics of the basic 60 cycle current and harmonics of the switching frequency to flow through a building’s wiring. These additional frequencies, sometimes referred to as “dirty electricity” or as “poor power quality” are said to cause low frequency[6] electromagnetic fields within a home or building that can cause occupants to become ill and often experience some of the same symptoms as were mentioned earlier in connection with radio frequencies. Many have reported anecdotal accounts of such symptoms experienced even with electronic meters that did not contain a radio transmitter or where the transmitter had been turned off.

All smart meters and digital electronic meters contain such power supplies, as do many other electronic devices commonly found in homes today. The difference is that most other devices can be and usually are turned off during sleep hours. Smart meters cannot be turned off. Complaining customers assert that only the traditional analog meter, electro-mechanical in nature, can avoid these problems.

Procedural History.

This case began originally on January 26th, 2009, with an application by Detroit Edison for a general rate increase. At that time there was an application, a proposed “Notice of Hearing”, prefiled testimony by company witnesses and accompanying exhibits. On February 2nd the MPSC Executive Secretary notified Detroit Edison (Appendix D, docket entry #23) of the final form for the Notice of Hearing.

The proposed Notice of Hearing published in newspapers and elsewhere advised interested persons that the company was seeking $378 million in increased annual revenues and that this would increase a typical residential customer’s bill, if approved, by $6.78 per month. The only other information provided to the public as to the content of the case was this statement:

“Detroit Edison is requesting the additional annual revenues in order to recover the costs associated with environmental compliance, the operation and maintenance of its electric distribution system and generation plants, customer uncollectible accounts, inflation, the capital costs associated with the addition of plant, and to recognize the reduction in territory sales. The rates proposed in this filing reflect the realignment of rates ordered by the Commission.”

 

One of the major issues in this case was the company’s request for funding for a general deployment of its Advanced Metering Infrastructure (AMI) program, where prior approval had been limited to a pilot program. The $378 million in added revenue the company was seeking included $8.1 million for AMI in the 2009-2010 test year as well as $37 million to be included in the capital rate base for AMI at the end of the test year. The first half of the test year was characterized as an extension of the original pilot project and identified certain named cities. The second half of the test year was to begin mass deployment of AMI meters through a large part of Edison’s service area, without restriction as to any particular cities or areas.

MPSC staff generally supported the company’s request for funding for AMI mass deployment, though they specified that all expenses would need to be reviewed in future rate cases. The AMI program was only one of many issues disposed of in the original case.

On January 11th, 2010 the Commission approved (docket entry #379) a general rate increase of $217,392 in lieu of the $378 increase originally applied for. Included in this rate increase was the $8.1 million rate increase for the AMI meter program as well as an increase of $37 million in the capital rate base for the AMI program. The Commission also approved a pilot program for rate decoupling and other relief for the company.

The Attorney General and ABATE appealed the AMI and decoupling provisions in this Order, among other issues. This Court eventually affirmed some parts of the Commission’s Order, struck down the rate decoupling provision and remanded only the AMI program for the Commission to build a “real record, with solid evidence” to support whatever decision the Commission would then make.

 

On September 25th, 2012 (docket entry #450) the Commission issued an Order reopening this case pursuant to the remand. At the time of the preliminary hearing on the reopened case, the Commission was well aware that the AMI meters were controversial, not only because customer benefits had not been quantified, but also because of health and privacy concerns. They knew this because they had been obliged to open a comment case, U-17000, in January of 2012, upon receipt of complaints from 9 city governments. Over 400 utility customers subsequently submitted written complaints against the AMI meters under this case number. MPSC staff issued a report on June 29th of that year summarizing the comments and expressing the opinions of staff as to the health and privacy issues. The Commission had then issued an order on September 11th that any privately owned Michigan utility implementing AMI meters must have an “opt-out” program. The Commission also indicated that it would, pursuant to a staff recommendation, open a separate case to deal exclusively with the privacy issues posed by AMI metering. At that time another case, U-17053, was going forward to evaluate an opt-out plan submitted by Detroit Edison.

On October 31st, 2012 the Commission opened Case U-17102 to “to review issues concerning customer information and data privacy related to advanced metering infrastructure deployment”. This was, like the U-17000 case, simply a comments docket wherein no evidence could be submitted. It was, moreover, limited to input from the utilities, not from the public. Its focus was not so much on customer privacy rights as it was on cyber security precautions and what uses a utility might make of information once harvested.

The U-17053 case on Detroit Edison’s opt-out plan was a contested case where evidence was submitted by the company and by 9 interveners. In this case, however, it was held that no evidence could be submitted on the type of opt-out meter to be offered customers or any evidence concerning the health issues or privacy issues attendant on the type of opt-out meter Edison had proposed. It was said that health and privacy concerns really belonged in a general rate case, or that the other 2 pending cases (U-17000 and U-17102) had or would address those issues.

What we know now is that none of those cases ever provided a forum wherein evidence concerning health or privacy dangers might be offered. It is difficult to avoid the impression that the Commission, in its zeal to promote the smart grid concept, has engaged in a pattern of evasion on these issues.

On October 16th, 2012 a “Prehearing Conference” was held to consider petitions for intervention and schedule the reopened case. The ALJ on this occasion denied the petition of Appellant to intervene as well as the petitions for intervention by all others who did not participate in the original case. She found these proposed interventions to be “not timely” and also ruled that the issues Appellant and other petitioners intended to raise were “beyond the scope” of the remand.

On October 22nd, 2012 Appellant and two of the other petitioners filed an appeal to the Commission of the ALJ’s rulings (docket entry #458). A major argument was that intervention now could not be ruled untimely where there had been no opportunity to participate in the original case, due to a defective Notice of Hearing. On December 6th, 2012 the Commission denied this appeal (docket entry #462). Neither the ALJ nor the Commission cited any explanation for their conclusion that the original Notice of Hearing had been adequate, and neither cited any established Commission rule that would justify excluding new interveners from the preliminary hearing of a newly reopened case.

As the reopened case moved ahead, participation was limited to Detroit Edison, MPSC staff and the Attorney General. Other parties who had been represented at the Prehearing Conference neglected to submit evidence or briefs or participate in cross-examinations. Staff generally supported Edison’s positions. The Attorney General’s office, through Assistant AG Don Erickson, offered the expert testimony of Michael J. McGarry of Blue Ridge Consulting Services, that was accepted as expert testimony and bound into the record.

Witness McGarry gave testimony that was generally favorable to smart grid and smart meters, but argued that there was an intergenerational issue in that costs would be borne mainly by customers in the first 10 years of the 30 year projected plan, while benefits would be enjoyed mostly by customers in the last 10 years of that plan. He recommended that costs be treated as a “deferred regulatory asset” to be expensed only when and to the extent benefits were actually being received by customers, rather than the investment of the initial 10 years being fully depreciated by the end of the 10th year. He also argued that the Commission should task its staff with closely following the AMI program to ensure that costs were being adequately controlled. The AG argued these points in his brief and in his Exceptions to the PFD.

Detroit Edison believed the normal depreciation would sufficiently match expected AMI costs with expected AMI benefits, and that sufficient programs were already in place to tightly control AMI costs. The staff witness argued that treating AMI costs as a deferred regulatory asset would be unwieldy.

The Commission ultimately rejected the main recommendations of Mr. McGarry and the Attorney General chose not to appeal.

 

ARGUMENTS

 

  1. IN CLEAR VIOLATION OF THE REMAND ORDER OF THIS COURT, THE SCOPE OF THE REOPENED PROCEEDING WAS LIMITED TO ONLY THE QUESTION OF RATES.

 

Standard of Review. This Court reviews contested cases at the MPSC under the arbitrary and capricious standard, but also under the standard that a Commission decision must be supported by competent and relevant evidence on the whole record. This Court, in Case No. 296394, provided in it’s Order of April 12th, 2012, the scope this remand case was to have. The Court concluded the AMI section of it’s decision with these words:

 

“… we remand this matter for the PSC to 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 AMI, and projected effects on rates. In other words, a real record, with solid evidence, should support whatever decision the PSC makes upon remand. “ (Emphasis added)

 

The Court provided further clarification of its Order in a footnote reference to MPSC Case U-17000. In that case the Commission ordered all regulated electric utilities to provide “much the same information we (the Court) find lacking here”, including:

 

“(1) The electric utility’s existing plans for the deployment of smart meters in its service territory; (2) The estimated cost of deploying smart meters throughout its service territory and any sources of funding; (3) An estimate of the savings to be achieved by the deployment of smart meters; (4) An explanation of any other non-monetary benefits that might be realized from the deployment of smart meters; (5) Any scientific information known to the electric utility that bears on the safety of the smart meters to be deployed by that utility; (6) An explanation of the type of information that will be gathered by the electric utility through the use of smart meters; (7) An explanation of the steps that the electric utility intends to take to safeguard the privacy of the customer information so gathered; (8) Whether the electric utility intends to allow customers to opt out of having a smart meter; and 9) How the electric utility intends to recover the cost of an opt out program if one will exist.” (Emphasis added)

 

It should be noted that this Court did NOT state in that Order that the U-17000 case, then in progress, which was not a contested case or a case involving evidentiary hearings, would satisfy the requirements for the remand case. On the contrary the Court, as noted above, directed that “a real record, with solid evidence, should support whatever decision the PSC makes upon remand.“ The reference to U-17000 was only by way of explaining the type of evidence that was lacking in this original case and would need to be developed through evidence in the remanded case.

Discussion. The Commission’s Order (docket #450) reopening this case specified that Case U-15768 is reopened for the “limited purpose of addressing the Court of Appeals opinion and order in In re Detroit Edison Co Applications, 296 Mich App 101; 817 NW2d 630 (2012).” It further specified “A prehearing conference shall be held at 10:00 a.m. on October 16, 2012 before Administrative Law Judge Teresa A. Sheets.” The Order did not specify what topics would be considered within the scope of the reopened proceeding, other than by reference to the remand order.

At the prehearing conference on October 16th the ALJ ruled on petitions to intervene that had been submitted by Appellant and several others. All of these petitioners indicated in their petitions that their purpose in intervening would be to address AMI issues that were broadly within the scope of what this Court had ordered in the remand. Appellant had outlined in his petition (docket #453) under “Part III Statement of General Position” the many considerations he intended to raise as to the burdens and risks of smart meter technology. Appellant Linda Kurtz had presented in her petition (docket #452) a very similar statement of considerations she intended to raise as to the burdens and risks of smart meter technology.

In the face of these and other similar petitions the ALJ ruled, in part, as follows (Tr 1, 9-10)

“… I want to note for the record that the Court of Appeals remanded this on a very narrow issue regarding the fiscal cost benefit analysis of the AMI Program, also known as the Smart Meter Program. The issues that have been brought up by the proposed intervenor Kurtz, as well as the other intervenors, address several unconstitutional issues, health and safety issues, tort issues, and none of those issues are within the scope of the remand from the Court of Appeals. And so I also find that the petitions themselves, the subject matter is outside of the scope of the remand for this matter. (emphasis added)

 

It seems clear that the ALJ is choosing to misconstrue the remand Order. She made the above ruling on scope early in the hearing when only one of the four petitioners was yet on hand as a result of a traffic situation on I96. Ms. Kurtz therefore was the only one who got a chance to present an oral argument prior to the ALJ’s ruling on scope. Ms. Kurtz’s arguments covered some of what Appellant would have said had he the opportunity to do so prior to the ruling, and were as follows (Tr 1, 5-6):

“…the Appeals Court remanded this for a full hearing on all aspects of the Smart Meter Program; usefulness, benefits, potential burdens, specific information gleaned from pilot phases …”

and “…I can bring in information on the effects on people, including myself, and other people as well; customer response, how much people do or do not like this.”

and “… the Court of Appeals is asking that there be a solid record based on evidence, and so far that hasn’t been the case.

And “So there, right now there is not a complete record, and that is something that I, along with expert witnesses, will be able to provide and make a more complete record for the state and for the MPSC to consider.”

 

It is noteworthy that neither the MPSC staff nor the Attorney General nor any other party present except Detroit Edison opposed the petitions to intervene by the four who were excluded by the ALJ’s ruling on scope. Perhaps even more noteworthy is that an attorney present, John R. Canzano, representing the utility workers union, and who arguably had no stake in these petitions voiced his objection to the ALJ’s ruling on scope (Tr 1, 11-12):

“MR. CANZANO: Your Honor, I’d just like to interject something here, in that we weren’t opposing this and we don’t really have a position either way on the intervention, I understand that can cause burdens on the process to have people come in late like that, but your comments about the scope of the remand, that, I’d just like to put on the record that’s not the way I read the Court of Appeals. It seemed to be a quite broad remand, including, in what is — I’m looking at the Commission’s order reopening that proceeding where they quote from the Court of Appeals, and amongst other relevant matters, evidence relating to the benefits, usefulness, potential burdens, and so forth, but it seems it’s not just the cost part of it.”

 

Following the ALJ’s decision to deny intervener status to Appellant and others, Appellant and the Cusumanos preserved the issue of their exclusion by submitting, six days after the prehearing, an “Application & Brief to Commission for Emergency Leave to Appeal Ruling of Administrative Law Judge in Ongoing Proceeding”.

On December 6th, 2012 the Commission issued an Order “Affirming Denial of Petitions to Intervene”. This Order, in part, affirmed the ruling of the ALJ that issues petitioners sought to raise were beyond the scope:

“The Commission … finds that the ALJ properly denied the petitioners’ attempts to intervene in this proceeding and to expand the scope of the limited remand ordered by the Court of Appeals.” (docket #462, page 4) (emphasis added)

 

The Commission Order then incorrectly states:

 

“Additionally, the Commission’s August and September 2012 orders specifically asked for the issues to be framed by the existing parties …” (emphasis added)

 

What is true is that the August Order stated:

 

“The Commission finds that the parties to this proceeding should be authorized to submit recommendations for procedures to be followed in order to comply with the court’s decision.”

 

To solicit recommendations on procedures is quite a different thing than stating that only existing parties may participate in the reopened case.

The Commission, in an apparent attempt to make its decision sound reasonable, then improperly suggests that the opportunity to submit comments in the U-17053 case, where Appellant was not an intervener and where the issues Appellant sought to raise here had already been ruled “outside the scope”, is somehow an acceptable substitute for the opportunity to submit evidence in this contested remand case.

Appellant urges this Court to find that the Public Service Commission has clearly violated the remand order of this Court by conducting hearings that are not designed to develop competent and material evidence on the whole record.

 

  1. THE COMMISSION COMMITTED HARMFUL ERROR IN DENYING INTERVENER STATUS TO THIS APPELLANT AND TO SEVERAL OTHERS WHO PETITIONED IN THE REOPENED PROCEEDING.

 

  1. Issue – Timeliness of Petition. Appellant’s petition to intervene was timely where petition was submitted 7 days before pre hearing conference on the reopened case, where there was no Commission rule against such an intervention, and where an improper Notice of Hearing in the original proceeding effectively denied Appellant an opportunity to intervene in the original proceeding.

Standard of Review. This Court reviews actions of the Commission under the ‘arbitrary and capricious’ standard and, where a hearing is required, for competent and material evidence on the whole record. A failure of the Commission to follow its own rules to the detriment of a party would constitute arbitrary and capricious conduct, particularly when fundamental norms of due process are violated.

The requirements for timely interventions are set forth in MPSC Rule 460.17201 (Rule 201). Notably these requirements state the petition must be filed 7 days before the “initial conference or prehearing conference”. (emphasis added). Rule 201 also contains a provision that an intervention may be allowed on a limited basis even if not timely filed, provided that it does not interfere with the schedule.

Discussion.

(1) Appellant did file his petition 7 days before the prehearing conference. The barring of intervention took place at what had been designated by the Commission as the “Prehearing Conference” (docket #450) for the reopened case. The main business of this hearing was scheduling all the events of the reopened case. Yet the ALJ maintained that:

 

“the Rules of Practice and Procedures, Rule 460.17201, require a petition for leave to intervene to be filed with the Commission not less than seven days before the date set for the initial prehearing.” (Tr 1, 8) (emphasis added)

 

The ALJ is plainly reading something into Rule 201 that is not there. The rule clearly says “initial conference or prehearing conference”.

Commission supported decision of ALJ to bar Appellant’s intervention on the basis (in part) that the intervention was untimely. (docket #462, 4)

Yet the ALJ excluded Appellant from participating even on a limited basis provided by Rule 201, subject to not burdening the schedule, and the Commission supported that decision as well.

(2) No objection to this intervention by Commission staff or Attorney General. Objection was made only by Detroit Edison.

(3) Commission had provided no real opportunity for appellant to have intervened in the original proceeding. The opportunity to participate in the original hearing clearly depends on whether a prospective intervener had any real notice concerning the purpose(s) or topics of the original hearing. No person, who is not a regular participant in general rate hearings, is going to invest time and resources studying all the details, charts and footnotes of a general rate filing in order to discover that an unusual topic, profoundly affecting all utility customers, and not previously part of any general rate case, has been slipped into such a case without notice in any newspaper.

Petitioner Linda Kurtz exemplifies this problem in her argument before the ALJ (docket #459, Tr1, 6):

“I also want to say that in terms of intervening, I never even heard of the Smart Meter until late in May of this year, so there was no way that I would have even had any idea about this program, intervening in this, anything about it whatsoever.”

 

(4) Notice requirements. Act 306 of 1969, also known as the ‘Administrative Procedures Act’ of 1969’, sets forth in Section 24.271 the requirements for giving notice of a hearing before a state administrative agency in a contested case. Specifically section (2)(d) defines the subject matter content required in such a notice:

“(d) A short and plain statement of the matters asserted. If the agency or other party is unable to state the matters in detail at the time the notice is given, the initial notice may state the issues involved. Thereafter on application the agency or other party shall furnish a more definite and detailed statement on the issues.” (emphasis added)

 

The Commission’s own rules provide further instruction as to the content of a notice of hearing:

“R 460.17305 Initial notice of hearing.

Rule 305. (1) … The notice shall contain all of the following information:

(c) A short and plain statement of the matters asserted and issues involved. The commission or its secretary may prescribe the form and manner of notice to be given.”

 

(5) Actual content of Notice and Application documents. It was not only the public Notice of Hearing that neglected to mention that authorization for mass deployment of AMI meters was being sought. It was also the application itself. One may search the entire 19 page application document (docket #0001) and find no mention of the words “smart meter” or “AMI meter” or “advanced metering”.

There are two references to “advanced metering infrastructure” (AMI) in the testimony of P.D. Whitman (docket entry #0002, pages 2,4) and a number of references to the acronym ‘AMI’ in his testimony and in a footnote to one of the exhibits accompanying Edison’s application. Nowhere in the application, testimony or exhibits is the term “advanced metering infrastructure” defined or explained in any language that a person unfamiliar with it could grasp. Appellant asks this Court to consider the possibility that it was the intention of Detroit Edison, and perhaps of the Commission, to hide from the public an important issue that would profoundly affect all utility customers.

 

(6) Actual procedure followed. The company did seek approval of its proposed Notice of Hearing and did obtain such approval from the Executive Secretary of the Commission in her letter of February 2, 2009 (docket #23). Rule 305 does provide the Commission or its secretary with the ability to prescribe the form of notice but does not create a license to conceal the content of a case. (emphasis added)

 

To summarize this issue, Appellant argues that inasmuch as both the original Notice of Hearing and the Application were deficient in not mentioning that the utility was seeking authorization to impose a radical new technology on its customers, it would follow that interested persons were excluded from participating in the original hearing and should not then also be excluded from participating in the reopened case. To exclude such persons now, who were previously excluded by failure of notice, would be a rank injustice and amount to arbitrary and capricious conduct by the Commission.

  1. Issue: Denial of the petitions of Appellant and others was not harmless error.

 

Standard of Review. This Court reviews contested cases at the MPSC under the arbitrary and capricious standard, but also under the standard that a Commission decision must be supported by competent and relevant evidence on the whole record. This Court, in Case No. 296394, provided in it’s Order of April 12th, 2012, the scope this remand case was to have. The Court concluded the AMI section of it’s decision with these words:

 

“… we remand this matter for the PSC to 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 AMI, and projected effects on rates. In other words, a real record, with solid evidence, should support whatever decision the PSC makes upon remand. “ (Emphasis added)

 

Discussion. This Court has already concluded that the Commission failed to develop competent evidence on the whole record the first time around and ordered the case reopened for the purpose of developing such evidence the second time around. But what we saw the first time around was that none of those who were parties or interveners then saw fit to raise the issues of how this new technology would burden the utility customers (other than in a purely financial sense through their utility rates) or the possible risks to customer’s health that might be entailed.

Appellant argues that if there is to be meaningful arguments and evidence introduced on these issues the second time around there must be participants who have an interest in raising these concerns. The whole idea of a contested case is that truth is more likely to emerge from an adversarial process. To have the case proceed the second time around where the utility only needs to go through the motions of defending its AMI plans and there are no participants to challenge its main contentions or witnesses or to introduce rebuttal testimony on those main contentions, almost guarantees that the second time around will fail to achieve the purposes for which this Court remanded the case.

When this Court ordered the Commission to consider the “risks” and “burdens” of AMI technology a reasonable inference would be that “risks” would include the risks to the customers as well as the risks to the utility itself. Such an interpretation of the remand order is borne out by the fact that this court indicated in a footnote that the issues named in the U-17000 case were indicative of the issues that the Court found lacking in the original hearing of this case. And surely the risks to customers would include the risks to customers’ health. And if the technology is going to invade customers’ privacy, and perhaps even their Fourth Amendment rights, then surely that is a burden on the utility customers that ought to be weighed along with other considerations in deciding if this technology should even be permitted, let alone. funded at the customers’ expense.

(2) No health or privacy evidence introduced by any official participant. A review of the prefiled testimony of the reopened case reveals that Detroit Edison introduced no evidence to establish that the AMI meters did not present a health issue or that these meters did not, in fact, invade customers’ privacy. Similarly, the record will show that no other party or admitted intervener introduced prefiled testimony on the health or privacy issues. Further, the transcript of the cross-examinations of the Edison witnesses and the staff witnesses will show that these issues did not come up in cross. All of this, of course, would be consistent with the ALJ’s ruling, affirmed by the Commission, that such issues were outside the scope. But all of this transpired in the context of written complaints from 9 city governments concerning health and privacy issues and from over 400 utility customers, also concerning health and privacy issues, which, by the Commission’s own admission, were the reason for opening comment docket U-17000. (U-17000 case, docket entry #0001)

(3) Appellant’s proffered testimony excluded from record. Early in the reopened case, Appellant did proffer the expert health testimony of Dr. David Carpenter of the State University of New York at Albany. This was prefiled sworn testimony and was served on all parties (Appendix E). Appellant attempted to file this testimony and did serve on all parties in order to preserve the issue that highly relevant evidence was being excluded from the case by improper decisions of the Commission. The Executive Secretary however did not make a docket entry for this testimony as she had been instructed by the Commission to accept no filings from Appellant or from other petitioners who had been denied intervener status.

Summary of this issue. Denial of the petitions of Appellant and others was not harmless error because it effectively prevented the formation of a solid record of evidence on the range of issues that the Commission was ordered to consider in the remand case.

 

 

 

 

 

 

 

III.            APPELLANT HAS STANDING TO BRING THIS APPEAL

Standard of Review. Pursuant to MCR 7.203(A)(2) “The court has jurisdiction of an appeal of right filed by an aggrieved party from … (2) A judgment or order of a court or tribunal from which appeal of right to the Court of Appeals has been established by law or court rule” (emphasis added).

We see that jurisdiction would obtain for an appeal of right from a final Order of the Michigan Public Services Commission where such appeal is taken within 30 days of such Order, provided that the appealing party is “aggrieved” within the meaning of the court rule (supra). It is noteworthy that there is no mention in either of the statutes or in the court rule that the appealing party must have participated in the proceeding below.

This Court, In Re Freeman Estate, 218 Mich App 151, 154-155, (1996) stated, “Under MCR 7.203, the term “aggrieved party” is defined as “one whose legal right is invaded by an action, or whose pecuniary interest is directly or adversely affected by a judgment or order. It is a party who has an interest in the subject matter of the litigation.”

The Michigan Supreme Court, in Federated Insurance Company v. Oakland County Road Commission, 475 Mich. 286, 715 N.W.2d 846, stated:

 

“An aggrieved party is not one who is merely disappointed over a certain result. Rather, to have standing on appeal, a litigant must have suffered a concrete and particularized injury, as would a party plaintiff initially invoking the court’s power. The only difference is a litigant on appeal must demonstrate an injury arising from either the actions of the trial court or the appellate court judgment rather than an injury arising from the underlying facts of the case.” (emphasis added)

In Freeman, supra, this Court cited a further requirement, quoting from Martin, Dean & Webster, Michigan Court Rules Practice (3d ed, 1992), authors’ comment on Rule 7.203, § 1, pp. 138-139. “If a person has not been represented at trial and the judgment of the [lower] court directly affects the interests of the person, that person will be considered an aggrieved party on appeal. Such persons clearly have an interest in the subject matter of the litigation.”

Discussion. Appellant is a customer of Detroit Edison and takes service from the Company in the City of Ferndale. Appellant filed his “Claim of Appeal” within 30 days of a final tariff Order by the MPSC in a case that had been reopened by that Commission pursuant to an Order of this Court. Appellant is aggrieved by the two main provisions of that decision, dated October 17th 2013, providing that:

“A. The Detroit Edison Company’s request to recover costs associated with its Advanced Metering Infrastructure pilot program is approved.

“B. The Commission further concludes that the costs of the Advanced Metering Infrastructure pilot are just, reasonable, and in the public interest.”

 

This decision reaffirms the decision the Commission made on January 11, 20, in the original hearing of this case, to approve “a continuation of the pilot program to implement advanced metering infrastructure (AMI) in the company’s service territory.”[7] But the decision in this case to approve “a continuation of the pilot program” contains no geographic limits. For the first half of the test year it indicates that an additional 20,000 endpoints are to be installed, in certain named cities, at a cost of $4.7 million dollars. But in the second half of the test year there is included $20.1 million dollars for the “planned costs for six months of full implementation” with no specific cities or areas defined.[8]

This Court, sitting in review of a decision of a state agency, will apply a standard based on what the agency knew or should have known at the time of the original decision. The original decision then cannot be faulted for what the Commission did not learn until a later time. Appellant argues that before authorizing funding for “six months of full implementation” of a radically new technology that has not been properly evaluated, the Commission had an obligation to hold an evidentiary hearing wherein testimony might be admitted as to health and privacy effects, witnesses cross-examined and so forth. The Commission can hardly claim that it was ignorant that such risks might attend the new technology in view of the extensive published research that existed at that time.

The original decision in this case had the result of enabling Detroit Edison Company to move beyond the small initial pilot study and proceed to mass deployment of a technology whose safety for the environment and health effects upon individuals, including this appellant, had never been examined by the Commission through any sort of evidentiary proceeding. While the mass deployment arguably impacts the health of all utility customers by bathing entire neighborhoods with electromagnetic radiation, it more particularly bathes the neighborhood in which this appellant lives, with electromagnetic radiation 24/7/365.   Such radiation is hereby alleged to have long run health consequences for this appellant and for others who sought and were denied intervention for the reopened case. At the time the Commission made the decision to approve AMI funding in the original hearing of this case, it was the policy of Edison to permit no customer to opt out of the new technology. Therefore, at that time, the Commission would have knowledge that, were there to be any unfortunate health consequences, there would be no way for anyone living in Detroit Edison’s territory to avoid such consequences.

Part of the context of the reopened case, however, was that a so-called “opt-out plan” had been proposed by Edison and was under consideration in (then open) case U-17053. That opt-out plan had been approved by the Commission prior its final decision in this case. But even if appellant avails himself of the designated opt-out meter, his home is still being bathed in electromagnetic radiation from all the other smart meters and communication devices Edison has or will install in his neighborhood. Hence the complaint here goes to the overall decision to permit and to fund mass deployment of the new meters. Appellant’s particular grievance here, therefore, is not of a nature that could be addressed by even a well designed opt-out plan.

 

This appellant may suffer an injury from the constant exposure to electromagnetic radiation that is particular to him and not experienced or at least not perceived as a loss by many other utility customers. The utility has frequently cited the fact that the vast majority of its customers have not voiced objections to smart meters as though this was some sort of evidence that the majority are accepting this technology. But public acceptance must be founded on informed consent and it has been the policy of this utility not to provide any information to the vast majority of its customers concerning the possible harmful effects of the new technology or even to advise the majority of them that there is any controversy or that an opt-out plan is available. Thus the few thousands of customers objecting to the new meters can only be those who have bothered to pro actively inform themselves.

Thus, while the majority of customers have not informed themselves on this issue, this appellant and a few thousand others have done so and therefore have an interest that may be distinguished from the public at large. The majority of utility customers may choose to waive health concerns either because of lack of information or because they have been persuaded that there are benefits from smart meters that, in their minds, outweigh the possible risks to health. This appellant is therefore distinguished from the mass of customers of Detroit Edison in that he has not chosen to waive these concerns. He is distinguished in that he has chosen, unlike the majority of customers, to assert his rights, not only as a utility customer, but as a person who is having his present home, or any future home he might move to in Detroit Edison’s service territory, diminished in value and livability by the actions of this utility.

  1. COMMISION, ACTING ON WRITTEN COMPLAINTS, HAS JURISDICTION TO CONSIDER HEALTH & PRIVACY:

 

The Commission, and therefore this Court, has jurisdiction to consider the possible health and privacy impacts of AMI technology on customers and to take such factors into consideration in deciding whether customers shall be required to fund this technology.

Standard of Review. The issue here is how the Commission interprets the scope of its own authority. That is a question of law that this Court hears de novo. Great deference is customarily accorded the interpretation of a statute by the agency or commission charged with executing it. However the courts will not ignore the plain meaning of a statute.

The jurisdiction of the Michigan Public Service Commission, as established by Section 6 of Act No. 3 of the Public Acts of 1939 is very broad and endows the Commission with “power and jurisdiction to regulate all rates, fares, fees, charges, services, rules, conditions of service” (emphasis added).

Michigan Courts have held that the above is only an outline of jurisdiction and not a grant of specific powers. Specific powers have, however, been delegated to the Commission by the Electric Transmission Act of 1909, P.A. 106, MSA 460.551 et seq, by the Railroad Commission Act of 1909, P.A. 300, and by the Public Utilities Commission Act, P.A. 419 of 1919, among others.

There is also case law establishing how far and under what circumstances the above regulatory powers may be permitted to encroach upon a utility’s management prerogatives with respect to its privately owned facilities. The test for where regulation ends and management prerogatives begin turns on whether the issue at hand does or does not impact rates, for example, or impact conditions of service to existing customers. The extent of the Commission’s powers also depends on whether or not it is conducting an investigation and prescribing a remedy pursuant to a written complaint. See, for example, Huron Portland Cement Co v. Michigan Public Service Commission, 351 Mich. 255, 88 N.W.2d 492 (1958), Union Carbide v. Public Service Commission, 431 Mich. 135, 428 N.W.2d 322 (1988), and Consumers Power Co v. Michigan Public Service Commission, 460 Mich. 148, 596 N.W.2d 126 (1999).

The utility could not be compelled, in the first case, to extend its transmission line to serve a new customer in an area not previously served. The utility could not be told, in the second case, how much fuel oil to buy for one of its generating plants to meet peak loads. The utility could not be compelled, in the third case, to participate in a “retail wheeling” experimental plan, whereby it would be required to transmit electricity from another company over its lines to its own local customers.

The Supreme Court’s analysis in Union Carbide, supra, explored the three major statutes (supra) that gave the Commission specific authority to go beyond rate making under certain conditions.

At page 153 of this case the Court quotes section 5 of the Public Utilities Commission Act:

Upon complaint in writing that any rate, classification, regulation or practice charged, made or observed by any public utility is unjust, inaccurate, or improper, to the prejudice of the complainant, the commission shall proceed to investigate the matter. … Upon the completion of any such hearing, the commission shall have authority to make an order or decree dismissing the complaint or directing that the rate, charge, practice or other matter complained of shall be removed, modified or altered, as the commission deems just, equitable and in accordance with the rights of the parties concerned.” (emphasis added)

At page 156 of this case the Court notes a similar requirement in section 22 of the Railroad Act that, for the Commission’s authority to extend beyond rate making, its Order must have been the result of an investigation begun on a written complaint.

At page 161 of this case the Court yet again notes a requirement in section 7 of the Electric Transmission Act that, for the Commission’s authority to extend beyond rate making, its Order must have been the result of an investigation begun on a written complaint.

In testing the Commission’s Order in Union Carbide against each of those enactments, it was found that none of them provided authority for the Order in that case because the Commission was not acting pursuant to a written complaint, a necessary requirement for authority beyond rate making under all three acts.

The Supreme Court’s analysis in Consumers Power v MPSC was that the use of a utility’s distribution system to deliver another utility’s power to retail customers in its own territory was not a condition of service.

Discussion. The Commission has generally taken the position, in the context of smart meter complaints, that its authority is limited to rate-making and that dictating to a utility whether it may require “smart meters” of all customers or dictating the type of meters to be offered to customers “opting-out” of “smart meters” would exceed their statutory authority and infringe on managerial authority of the utility. See, for example, the Order of the Commission in the U-17053 case heard to approve Detroit Edison’s proposed smart meter opt-out tariff, page 18:

 

“As has been noted repeatedly in the various AMI-related proceedings, while the Commission may not encroach on the managerial decision to commence the AMI program and to select the equipment attendant thereto, it will continue to protect the interests of ratepayers through review of the expenditures associated with the program for reasonableness and prudence.

 

What is wrong with the above argument? It implicitly assumes that the only costs or risks that are important are those experienced by the utility, which are then passed on to the utility’s customers through the rates they pay for electric service. But what about the costs, and the risks, that are imposed, not on the utility, but directly upon the utility’s customers? If customers become ill they may incur medical expenses as a result. They may be forced to sell a home at a loss. What about the costs to society as a whole when or if there is increased incidence of cancer in areas where AMI meters were installed decades earlier? Appellant argues that the Commission has the responsibility to assure the delivery of safe electric service to the state’s customers where safety should be evaluated quite apart from any consideration of electric rates.

But even if ratemaking were the only standard, it makes no sense to require a cost/benefit analysis aimed at showing how benefits of the new technology will flow through to customers without also addressing the likelihood that costs as well as benefits will be experienced by those same customers. The cost/benefit calculation should factor in those costs as well as the presumed benefits.

 

CONCLUSION

The remand Order required the Commission to “conduct a full hearing” and required that “a real record, with solid evidence, should support whatever decision the PSC makes upon remand. “ This Court, in a footnote, referred to the U-17000 case by way of illustrating what issues were originally found lacking and should be included in the remand proceeding. In clear violation of the remand Order of this Court, the reopened case was limited to the question of rates.

The Commission in its order of October 17th, 2013 authorized Detroit Edison to include $37 million dollars in its rate capital base for the AMI program at the end of the 2009-2010 test year and to have its revenues for that test year increased by $8.1 million dollars, also in support of the AMI program, as documented by the testimony of Edison witness P.G. Horgan in docket entry #461

Carrying out the remand Order would necessarily require that there be some participants with an interest in arguing the issues that were neglected by all participants the first time around. But the Administrative Judge, with backing from the Commission, chose to exclude four petitioners who could have represented the interests that were neglected in the original hearing. It has been shown in this brief that there was no lawful basis for such exclusion, particularly in that these same petitioners had been effectively excluded from the original hearing of this case by a faulty notice of hearing. It was further shown that this exclusion of would be interveners and their evidence was harmful in that it had the effect of preventing the Commission from conducting a “full hearing” or developing the real record with solid evidence that it had been ordered to do by this Court.

It was shown that this appellant has standing to raise the issues presented in this appeal.

Finally it was shown that the Commission arbitrarily limited the scope of the reopened hearing to exclude health and privacy issues even where they had abundant evidence that these were issues of concern to utility customers and to at least 9 city governments. It was shown that the Commission had jurisdiction to consider these excluded issues based on many written complaints. Therefore this Court, in reviewing the action of the Commission, has jurisdiction to consider these issues.

 

 

 

 

 

RELIEF REQUESTED

 

WHEREFORE, Appellant David Sheldon respectfully requests that this Honorable Court:

(1) Find that the Order of the Michigan Public Service Commission of October 17, 2013 is not supported by competent and material evidence on the whole record, and

(2) Find that the Commission’s conclusion in the October 17th Order, that that “the costs of the Advanced Metering Infrastructure ‘pilot’ are just, reasonable, and in the public interest” is reversed with the necessity of making such a determination to be deferred to future cases,

(3) Find that the Order of October 17th, approving funding for Detroit Edison’s AMI metering program is reversed and that the Commission is directed to require Detroit Edison to refund to its customers the $8.1 million dollars that was included as a rate increase for the 2009-2010 test year, and to remove from its capital rate base the $37 million dollars that was previously allowed at the end of the 2009-2010 test year, and

IN THE ALTERNATIVE REQUEST THIS COURT FIND THAT:

(1) The Order of the Michigan Public Service Commission of October 17, 2013 is not supported by competent and material evidence on the whole record, and

(2) The decision to limit this case to rate considerations only, to the exclusion of public health and customer privacy considerations, was improper, and

(3) The decision to exclude this appellant and others who petitioned to intervene in the remand case was improper, and

(4) Remand this case to the Public Service Commission, for the second time, with a direction that the case shall again be reopened and conducted in a manner consistent with this ruling.

 

 

_________________________________       Dated: April 22nd, 2014

David Sheldon

 

 

 

 

 

 

 

 

[1] – AMI stands for “Advanced Metering Infrastructure”

[2] – The term “independent” as used here means research not funded by utilities, their trade associations, or the U.S. Dept of Energy, which is a principal backer of smart grid programs.

 

[3] Detroit Edison witness Robert Sitkauskas has stated on the record, in response to a query by the Commission in the U-17000 case, docket #146, page 3, the types of information the company admits will be collected:

 

“The following data will be collected from the AMI smart meters

  • Accumulated Watt hour (“Whr”) consumption readings
  • Load profile hourly interval Whr and Volt Ampere hour (“VAhr”) energy data
  • Load profile 5-15 min. Whr and VAhr energy data (used for load research,

commercial customers and voluntary SmartHome customer locations)

  • Instantaneous voltage
  • Gas module ccf readings (only in locations with a gas meter)
  • Meter messages, events, alarms and network parameters

At no time will any customer specific data, like addresses, phone number, account status or social security numbers be transmitted by the AMI meter or gas module.”

[4] The N.I.S.T. report explains that such information is available because the current drawn by each appliance has unique characteristics, not unlike a fingerprint. These characteristic patterns become visible when the utility is able to monitor the moment-by-moment consumption of the total current drawn. For each appliance, the amount of inrush current at startup, the amount of current drawn thereafter, the duration of draw, the power factor of draw, and the repetitive patterns of starts and stops provide those “fingerprints”.

Such characteristics allow a “load profile” graph to be drawn based on the data reported by the AMI device that can readily differentiate between a refrigerator stopping and starting as compared to a furnace motor or electric range. These load profiles then, it is said, reveal patterns of daily activity, such as when a family sleeps, when they are not home, when children come home from school, number of persons in the household, and other household events.

[5] Edison witness Robert Sitkauskas has stated on the record, in response to a query by the Commission in the U-17000 case, docket #146, page 5, the following:

“Edison believes that AMI smart meters are safe and have been thoroughly studied. The Radio Frequency (“RF”) emissions that occur when the meter is sending data are at very low levels, and according to leading research studies, do not cause negative health effects. It should be noted that standards for RF emissions have been developed by the federal government and all of the smart meters that Edison is installing fall well below these federal government standards for RF emissions.”

[6] – The frequencies of current caused by switched mode power supplies are generally multiples of the 60 cycle frequency or multiples of the switching frequency used and pulses or transients. Whenever such currents travel through a building’s wiring, electromagnetic fields are generated perpendicular to the direction of current flow. These can have an effect on the human body and are thought to cause many of the symptoms being alleged.

 

[7] The phrase “continuation of the pilot program” refers back to an earlier case, namely the Commission’s December 23, 2009 order in Case No. U-15244, to approve an “initial, small pilot AMI program”. The earlier program had been limited to two small communities, Grosse Isle and Harsens Island.

[8] Edison witness P.D. Whitman in his testimony (docket entry #0002, 11-12) explains the AMI costs included in this case as follows:

 

“Q. What AMI related costs have been included in this case?”

 

“A. These costs are summarized on Exhibit A-9, Schedule B6.3, Line 27 and

further detailed on Workpaper WPB6.3, Support Schedule 2. The costs

associated with the July 1, 2007 to June 30, 2008 period are primarily related to the development of the information systems needed to make use

of the AMI data. The costs for the deployment of the 10,000 endpoint pilot

are included in the July 1, 2008 to June 30, 2009 period ($9.2 million).

These costs include equipment and deployment expenditures to support

meter data management and field network infrastructure, information

systems, and new meter installations. Based on the Company’s due

diligence and early pilot results, Detroit Edison is confident that this pilot will

lead to full implementation. The additional 20,000 endpoint pilot costs ($4.7

million) are included in the July 1, 2009 to December 31, 2009 period and

allocated across the same cost categories as the 10,000 endpoint pilot. The

planned costs for six months of full implementation ($22.1 million) are

included in the January 1, 2010 to June 30, 2010 period.” (emphasis added)

 

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