Michigan Court of Appeals Smart Meter Cost Ruling

S T A T E  O F  M I C H I G A N
C O U R T  O F  A P P E A L S

In re Application of DETROIT EDISON
COMPANY to Increase Rates







In re Application of DETROIT EDISON
COMPANY to Increase Rates.





Before: SHAPIRO, P.J., and SAAD and BECKERING, JJ.


In these consolidated appeals, appellants the Association of Businesses Advocating Tariff Equity (ABATE) and the Attorney General appeal the January 11, 2010, opinion and order of the Public Service Commission (PSC). For the reasons set forth below, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion

———————[ First 4 Sections Omitted]———————————-

The relevant part of the order was Section V. (follows):


We agree with appellants that the PSC erred in approving funding for Detroit Edison’s advanced metering infrastructure (AMI) program. The PSC describes AMI as “an information gathering technology that allows Detroit Edison to collect real-time energy consumption data from its customers.” As ABATE explains, “[t]he so-called ‘smart meters’ allow the utility to remotely monitor and shut-off electricity to customers that have these meters installed.”  According to ABATE, the intention appears to be to “allow customers to access real time energy consumption data and make alterations in their energy consumption patterns in order to reduce their own costs and to reduce the demands placed upon the system at time of system peak.”  However, appellants have established that the PSC’s decision to approve the nearly $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.” In re Consumers Energy Co, 279 Mich App at 188; MCL 24.306.

What the record does reveal is that AMI is a pilot program that even Robert Ozar, Manager of the Energy Efficiency Section in the Electric Reliability Division of the PSC, concedes “is as yet commercially untested and highly capital intensive, resulting in the potential for significant economic risk and substantial rate impact.” At best, the actual evidence presented by Detroit Edison to support the rate increase was aspirational testimony describing the AMI program in optimistic, but speculative terms. What the record sadly lacks is a discussion of competing considerations regarding the program or the necessity of the program and its costs as related to any net benefit to customers.3 Though Detroit Edison and the PSC urge us to adopt an abuse of discretion standard of review because it characterizes AMI as “experimental,” we decline to do so. While we appreciate that a cost-benefit analysis for a pilot program may be more difficult to establish with record evidence, this inherent difficulty does not permit the PSC to authorize millions of dollars in rate increases without an informed assessment supported by competent, material and substantial evidence.

Moreover, we will not rubber stamp a decision permitting such a substantial expenditure—a cost to be borne by the citizens of this state—that is not properly supported. Were we to do so, we would abdicate our judicial review obligations. Again, the PSC may allow recovery of a utility’s costs only when the utility proves recovery of costs is just and reasonable. On the record before the PSC and, perforce, before us, the PSC’s decision was erroneous. Accordingly, 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.

/s/ Henry William Saad
/s/ Jane M. Beckering

3 We take judicial notice that, on January 12, 2012, the PSC issued an order opening a docket to investigate the use of smart meters by electric utilities in Michigan. Case No. U-17000. The order states that its purpose is to address concerns raised by customers and municipalities and to “increas[e] the Commission’s and the public’s understanding of smart meters . . . .” To that end, the PSC ordered all regulated electric utilities to provide much the same information we 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.”

2 thoughts on “Michigan Court of Appeals Smart Meter Cost Ruling

  1. Our dog kennel and the outdoor surface the dogs continually use is close to the new”smart meter”installed in DTE’s TEST AREA in Bloomfield Twp.
    Since this “smart meter” has been installed BOTH of our pets have lost their normal hearing by a great margin!
    I believe these “smart meters” emit poweful high density radio frequency that has caused their hearing loss!!
    I believe this equipment should be removed asap and the program eliminated before any more animals or humans suffer from this radiation emmited from these so-called “smart meters” !!

  2. Not only is it a Radiation problem but a Spy center using our property as a Broadcasting center.. What Blackmail are they going to use next– take the chip under the skin. his is all about Govt. control of all of our Life from Food, Water and Energy. Control these and you can control the people. Is this Nazi Germany revisited?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s