Some of the Consumers customers who appealed may take some comfort in the Court’s decision to remand one small part of their case to the Michigan Public Service Commission (MPSC) for reconsideration. It is with some reluctance, therefore, that I write this story. On April 30^th, 2015, the Michigan Court of Appeals (MCOA) issued a decision concerning the twin appeals that had been filed against the decision of the MPSC that, in turn, had both approved overall funding for the smart meter system and also approved a schedule of fees for persons wishing to opt-out of a transmitting smart meter. This decision may be found under the “Legal” menu tab on this website.

One appeal was by Michigan’s Attorney General and concerned his claim that when the MPSC made a decision allowing Consumers to recover the overall costs of its smart meter program from customers, that decision had not been properly supported by evidence on the record. The second appeal was by a group of 16 Consumers customers from the Muskegon area in which this same overall cost recovery was challenged as unsupported by the evidence. Also challenged was the inadequacy of the so called Consumers ‘opt-out’ tariff which, the appeal claimed, allows Consumers to force all their customers to have a smart meter, either with radio on or radio off. The two appeals were consolidated by the court and heard during one oral argument and decided by one court order.

The Attorney General’s appeal was denied altogether on grounds that he had apparently already signed off on funding the smart meter program as part of a settlement deal. In that settlement agreement, the AG had specifically exempted questions concerning the smart meter program to be decided at a later date. But the amount of revenue approved in the settlement included the amounts needed for the smart meter program. The Court took the position that MPSC’s only authority with respect to smart meters was to approve or not approve rates and, since the rates had already been approved, the AG’s appeal was held to have no merit.

The appeal of the Consumers customers, like that of the Attorney General, raised the issue that there was wholly inadequate evidence on the record to support the MPSC’s decision to approve overall cost recovery for the smart meter program. But, unlike the AG’s appeal, the Consumers customers had not signed off on these overall program costs. They had not participated in the original hearing of the case before the MPSC. The Court did not even comment on the argument of the Consumers customers that costs for the overall smart meter program had not been supported by appropriate evidence on the record. The Consumers appeal brief may be found under the “Legal” menu tab on this website.

The Consumers appeal also challenged the very idea of opt-out fees, arguing that the MPSC should have considered an alternative opt-in approach. Regrettably, the issue that any true opt-out must allow customers to keep or get back their mechanical analog meters was not even raised in the appeal. Raising this issue would have supported another argument that Consumers customers are getting little or no benefit by joining the ‘opt-out’ program. The appeal of the Muskegon Consumers customers was denied for the most part, except for a question as to the amount of the opt-out fees. Not whether there should be opt-out fees, but just the question of the amount of those fees. For that one narrow issue the Court remanded the case back to MPSC to develop a competent body of evidence to support whatever opt-out fees it might ultimately set after such a review.

The Consumers appeal also raised a Fourth Amendment argument but left out a key point necessary to win such a point. Ordinarily the Fourth Amendment is applied to actions of law enforcement or to the actions of other government agencies. In order to have it apply to a private entity, such as an investor owned public utility, it is necessary to demonstrate that the private entity is what is called a “state actor” in the case law. Such a demonstration was not made in the appeal brief at all and not made in a convincing manner in the reply brief or the oral argument. This panel chose to ignore the Fourth Amendment argument, unlike the panel that heard the DTE opt-out case two months earlier.

Sadly the appeals court stated that the decision whether to allow the Consumers customers to participate in the remanded case would be up to the MPSC. The MPSC is already on record that these customers should not participate since they were not participants in the original hearings. The MPSC also has a track record of excluding people from a remanded DTE case on similar grounds.

So what will come of all this? The case will be sent back to MPSC for a rehearing of the opt-out fee question, but, in all likelihood, no participation by these appellants. The same folks who didn’t think the issue was all that important the first time around will be the only ones allowed to introduce evidence the second time around. The MPSC will go through the motions of fulfilling the Court’s Order and will almost certainly, in the end, again approve the same opt-out fees approved the first time. Nothing will have been gained, except perhaps to make the MPSC work harder to achieve the same outcome.

Did this appeals court make smart meters mandatory? Absolutely not! The appeals court in this case, as in the earlier reported DTE case, was constrained, when reviewing the actions of an administrative agency, to only consider whether the agency did anything wrong. They could not get into the broader issues of whether customers have a valid complaint about what they are being subjected to. The Court based its opt-out decision on the MPSC not having the authority to tell a utility what kind of meters to use. The appeals court stated, in these two cases, that MPSC only has the authority to set the rates for whatever Consumers or DTE wants to do. This is good because it deprives both utilities of the argument that their smart meter programs are mandatory because the MPSC ordered it. It leaves both utilities in the position of making their programs mandatory solely on their own say-so.

The silver lining: The door is now open for individual utility customers, acting singly or as a group, to go into one or more of the state’s circuit courts and argue that Consumers (or DTE) has no legal authority to force smart meters on non-consenting customers! If such a legal action were successful at the circuit court level it would doubtless land in front of this appeals court in due course. But the appeals court, when reviewing the decision of a circuit court has much broader discretion to look at all the issues, including constitutional issues.