Appeal and Remand of Consumers Energy Opt-Out Program

For updates on the Consumers Energy smart meter program and opt-out program, please go to our blog. This blog can always be reached via our Alerts and Breaking News box on the right-hand side of your screen.

 

1. History
2. Appeals Court Judge Resoundingly Supports Consumers Energy Customers
3. Judge O’Connell's Opinion on Costs
4. Judge O’Connell's Opinion on Health, Safety, Privacy, Citizen Rights & Costs
5. State Representative Supports No-Fee Analog Opt-Out Following O’Connell’s Opinion
   

 

History

Not surprisingly, the Michigan Public Service Commission approved Consumers Energy’s smart meter program and opt-out program. You can find the complete case filings in the case,U-17087, at the Michigan Public Service Commission (MPSC) website. Here is a direct link to the MPSC’s decision in the case. The opt-out rules (tariff) are on page 11 of this PDF. Consumers Energy calls its program a “smart energy program.”

The MPSC decision was appealed by the Attorney General and by a group of citizens who are customers of Consumers Energy. The Michigan Court of Appeals decided that Consumers Energy and the MPSC did not prove their case with regard to the opt-out program because they did not submit evidence sufficient to justify the exorbitant costs imposed. Therefore the case has been remanded (sent back) to the MPSC to be reheard. The Court of Appeals decided that because the Attorney General had reached a settlement agreement with the MPSC regarding the costs of the smart meter program itself, the MPSC decision to approve the smart meter program would stand. We do not at this point know whether the Consumers Energy customers will be allowed to be part of the opt-out remand, for legal reasons we won’t go into here. No customer voices were heard until these customers intervened, and it boggles the mind as to how the MPSC and Consumers Energy can reach a decision without input from the very people who will be affected.

Read more about the Attorney General’s position on the entire smart meter program. The Michigan Attorney General opposed Consumers’ entire AMI (smart meter) program. He urged the MPSC to, if the AMI program is not suspended, significantly reduce the opt-out fees proposed by the Commission and the utility. The Attorney General argued that there is no guaranteed cost recovery for AMI costs, that expenditures must be shown by the utility to be reasonable and prudent, that the project risk is borne by stockholders, and that ratepayers should obtain savings that offset the cost. The Attorney General argued in favor of suspending the program based, in part, on his rejection of Consumers’ calculation of the net present value (NPV) of the program. Consumers has calculated an NPV of $42 million for the period of 2007 to 2032. The Attorney General’s expert witness Sebastian Coppola, an independent business consultant, calculated a negative NPV of $133.4 million, three times the Consumers’ estimate. The Court of Appeals decided that because the Attorney General had reached a settlement agreement with the MPSC regarding part of this portion of the program, this issue was no longer litigable. What remains litigable is the opt-out program, because the MPSC and Consumers Energy did not submit evidence sufficient to justify the exorbitant costs imposed.

The MPSC, not satisfied with its win before the appeals court and the fact that the commission  will surely rubberstamp its previous decision regarding opt-out fees, asked the appeals court to reconsider its decision to remand the opt-out portion of the case. The court refused to do so, and the MPSC now has to hold new hearings on the opt-out. Will the Attorney General continue to go to bat for us? It’s hard to know. We suggest that you write the Attorney General at miag@michigan.gov and tell him you want him to stick up for customer rights.

 

Appeals Court Judge Resoundingly Supports Consumers Energy Customers

When the MPSC asked the appeals court to reconsider its decision, Judge Peter O’Connell wrote what amounts to a précis of all the points the anti-smart-meter movement has been making regarding fairness, double-charging, the attempt to use exorbitant fees as a weapon to stop people from opting out, and lack of proof regarding claims that smart meters do not affect health, safety, or privacy., O’Connell says that the MPSC and Consumers Energy have not proved their side of the case for smart meters. The opinion is easy to read, and we highly recommend taking a look at it. Several news outlets picked up the story. Read the MLive and Lansing Journal stories.

Background: A group of Consumers Energy customers and the Attorney General had appealed the Michigan Public Service Commission’s (MPSC's) decision to allow Consumers to implement smart meters. The Court of Appeals decided that the MPSC had not properly decided all the issues and sent the case back (“remanded” it) to the MPSC. The MPSC didn’t like this, and it asked the court to “reconsider” its remand. It contended that no further hearings are necessary concerning the advanced metering infrastructure (AMI) smart meter program. The court disagreed, and has stuck by its original decision to remand the case.

 

Judge O’Connell's Opinion on Costs

“The PSC and Consumers Energy advance the notion that smart meters will save the public money on their utility bills. Unfortunately, this argument is inherently illogical: how can smart meters save money when Consumers seeks to add millions of dollars to the base rate to fund the AMI program? It appears, as the Attorney General argues and as in other states, that the smart meter program actually increases rates.”

“I am concerned that under the opt-out program, those who opt-out must pay either a penalty, tax, or a fee for the privilege of retaining their non-smart meters. This Court, in its prior opinion, approved the PSC's order allowing costs to fund the AMI smart meter program to be added to the utility's base rate. At first glance, it appears the opt-outers are required to pay twice for the privilege of retaining their non-smart meter. The first payment is in the form of a penalty, tax, or fee to avoid having a smart meter installed on their home,5 and the second payment is of continued costs associated with the AMI smart meter program that eventually will be added to the base rate.”

“Why both charges? On remand, the PSC should answer that question. In the case of the opt-outers, they receive no benefit from the AMI smart meter program and must actually pay to be excluded from it, but then the opt-outer must also share in the costs of the program because of the increase to the base rate.”

“From this lower court record I am unable to discern the genesis, the reasons, or the rational for such an unprecedented double tariff.”

“I am also greatly concerned that the opt-out costs are actually a penalty imposed to force the opt-outers to comply with the AMI program. . .  . The PSC's implied finding that it is a fee/tariff rather than a penalty or a tax is not supported by even a scintilla of evidence in this lower court record. Just because the PSC says it is so on appeal does not make it so.”

Here is the link to the full opinion.

 

Judge O’Connell's Opinion on Health, Safety,
Privacy, Citizen Rights & Costs

• “For the reasons stated in this opinion, I conclude that a cost-benefit analysis [of smart meters] should include health, safety, and privacy issues”; in other words, the MPSC must consider more than just monetary aspects of the smart meter program.
• All the issues surrounding smart meters have not been heard and should be; despite its claims, the MPSC has not thoroughly addressed the smart-meter issue.
• The customers who appealed have not had an opportunity to present evidence (he is very curious to see what proof would be presented).
• Citizens have a right to be heard, and they have not been in this case.
• A very recent U.S. Supreme Court decision held that “‘cost’ includes more than the expense of complying with regulations; any disadvantage could be termed a cost. ... including, for instance, harms that regulation might do to human health or the environment."  (Michigan v EPA, 576 US ___, at 7 (2015)).
• “Because the PSC has not weighed the burdens, benefits, costs, and advantages of the entire AMI program, I am convinced that its decision is not supported by competent, material, and substantial evidence.” [This argument is similar to the argument the court made with regard to the smart water meter case which is discussed another blog post: You have to present sufficient evidence. In this case, he feels, the MPSC and Consumers Energy did not. In the smart water meter case, the court of appeals panel felt that the customer did not. We cannot emphasize enough—extreme detail and presentation of every possible piece of evidence is absolutely necessary to have even a hope of winning in court. In addition, you have to cover all the legal bases. For this, you need a lawyer.] This is the same opinion the court of appeals rendered with regard to the DTE smart meter program. The MPSC ignored the court of appeals decision, and simply rubberstamped its previous decision. The Attorney General did not bother to contest it.
• “The individual appellants argue that the opt-out program violates federal and state laws governing disability and ask the PSC to consider additional health, safety, privacy, and disability-related cost issues, including that smart meters may place individuals with electro-sensitivity issues, pacemakers, and heart-related issues in danger.”
• “Supplementing this record with additional facts and conclusions of law that actually support the PSC's ultimate decision and giving the individual appellants their day in court is a  fundamental requirement of our form of government.”

There is no guarantee as to what the MPSC will do, nor as to what the Court of Appeals will do if this case comes before it again after the MPSC reconsiders it. At a minimum, we have a clear articulation of some basic rights and basic guidelines the courts and the MPSC should follow. Judge O'Connell is the first judge to state the obvious: How can smart meters be saving us money when the utilities have had to raise rates (or get lots of free money from the government) to put them in? How can charging people an up-front fee to keep their opt-out meter be fair? The MPSC has never really considered the health and privacy issues, except by selectively considering industry and a few other publications.

Judge O'Connell took the MPSC to task for failing to submit adequate evidence to back up its claims. It is this same failure to present adequate evidence that has, at least in part, caused some Michigan smart meter cases to fail. We cannot emphasize enough the importance of having competent legal counsel.

Here is the link to the full opinion.

 

State Representative Supports No-Fee Analog Opt-Out
Following O’Connell’s Opinion

Following publication of the stories about Judge O’Connell’s opinion, state representative Tim Kelly of Saginaw stated that he fully supports an no-fee analog opt-out for all utility customers. In an MLive interview, Kelly said: “To require a customer to pay for a new meter, even when their analog meter is in working condition, shows blatant disrespect for the struggling families in Michigan.” In his press release, he says he supports legislation to support consumer choice. “I agree with the many legislators and the attorney general that utility customers should be given a choice without the economic penalty that is being forced upon them. Many of the constituents are asking how the utility companies are justifying the replacement of all the current meters with more expensive units when they have not proven that there will be a cost savings with the switch.”

 

 

Newsletter, Facebook—Stay Up to Date

Stay up to date by subscribing to our newsletter (it comes out every 1 to 4 weeks). We constantly update our website, so check back often. You can find updates and time-sensitive actions to take under our “Alerts and Breaking News” box. We also use Facebook to send out quick news updates. (While we understand the privacy concerns with Facebook, at this point in time it is a useful tool for us, and is a great way to spread the word about smart meters. If you only wish to use Facebook for access to our updates, you can get an account without revealing personal information—it’s all in what you choose to share, and you can give them any name or birthdate you like.)

Our newsletter comes out every 1 to 4 weeks. It will keep you informed and tell you what actions you can take to fight smart meters. Note that most email programs will filter out our newsletter unless you adjust your email settings. Even though you may receive individual emails from us, when we send the newsletter out to a large group, the emails may be placed in a folder other than your inbox. This happened to us! We weren’t even getting our own newsletter.. Please make sure you look for emails from smartmetereducationnetwork@ gmail. com in your Promotions, Spam, Junk, or other folders. Please contact your email provider to learn how to adjust your settings, or search on the internet.