Our Appeal of the DTE Opt-Out Program

The opt-out is unreasonable, unlawful, and does not benefit the customer

1. Introduction
2. History
3. Summary of Our Arguments
4. Standard of Review
5. Our Arguments
6. What We Are Asking the Court to Do

 

Introduction

Our appeal of the DTE opt-out program was heard January 13, 2015 in Lansing by the Michigan Court of Appeals.  After each of the cases that was heard before ours, a couple lawyers and one or two other people left the court room. When our case was over, more than 2/3 of the courtroom got up and left, probably 25 or 30 people. The judge halted the next case until all the people could squeeze out the door and the courtroom could be silent again. Thank you to everyone who showed up!

If the judges rule in our favor, the case will be remanded (sent back) to the Michigan Public Service Commission (MPSC), and the entire opt-out program will be renegotiated. Please consider attending the hearing. It will show the judges and the press that people really care about this issue and help to forward our cause. The hearing will be held at 925 West Ottawa Street in Lansing. Click here for driving and parking directions. Dress is formal.  No jeans, no T-shirts. Courtroom decorum must be observed. No matter how angry or disagreeable you find the other side’s arguments, you must remain silent and respectful. These judges could decide in our favor, so please act in ways that will garner their respect. Please do not bring cell phones into the courtroom. Two of the appellants are extremely sensitive to wireless devices.

Once we win this case, we will need approximately $25,000 to successfully prosecute our case before the Michigan Public Service Commission--and we can be successful if we do it well! We have come this far! Please reach into your pockets and donate as fully as you can, either now or once we win the appeal!

In the following sections we provide you with a summary of our arguments. (When DTE tries to get you to accept their smart meter or opt-out meter, you can remind them that this case is being heard in the court of appeals.)

This is a case in a court of law, so our arguments are constrained by the rules governing the courts. Briefly, we argue that:

1. The MPSC’s decision was unreasonable, as it did not consider evidence on whether the opt-out program benefits customers.
2. The decision unlawfully mandates smart meters as the only meter for DTE customers.

We ask the court to:

1. Reverse the MPSC order approving DTE’s opt-out.
2. Direct the MPSC to approve an opt-out that includes a non-smart-meter or meters as an opt-out meter.
3. Direct the MPSC to take and hear evidence on whether the AMI opt-out program benefits the opt-out customer.

We have withdrawn our arguments regarding the Americans with Disabilities Act (ADA), even though you will still find them in the brief. We are withdrawing those arguments because the record in this case is insufficient to mount a good appeal of the issue.

The judges hearing our case are Chief Judge William Murphy and Judges Patrick Meter and Deborah Servitto.

If you would like to read the briefs, you can do so via these links: our appeal, filed by Linda Kurtz, Cynthia Edwards, and Leslie Panzica-Glapa;  the replies of DTE and the Michigan Public Service Commission, which they filed on December 2, 2013; our reply brief, which we filed on December 23, 2013; our exhibits. The Court of Appeals number is 316728.

Read the press releases from 2013 (#1, #2), the annarbor.com news story, and the Oakland Press news story. Dominic and Lillian Cusumano’s appeal of the opt-out will also be heard on January 13.

 

History

This appeal by three members of the Smart Meter Education Network—Linda Kurtz (head of SMEN), Cynthia Edwards (co-founder of SMEN), and Leslie Panzica-Glapa (who removed her smart meter in January 2012)—was filed after the administrative law judge in U-17053 refused to allow relevant and lawfully required inquiry into DTE’s proposed opt-out program. The appeal was filed on June 14, 2013.  In addition, an appeal was filed by Dominic and Lillian Cusumano, who removed the smart meter from their home after Lillian’s health was affected. All of the testimony submitted in U-17053, as well as the MPSC’s decision, can be found on the MPSC e-docket.

In a 2008 report on smart meters, the MPSC stated that the relationship between the utility and the customer was very important. It seems to have ignored its own opinion. In 2008, the MPSC said that “the relationship between the utility and its customers” is of especial importance and that because of this, “the Commission has well-established procedures to ensure an equitable relationship between a utility and its customers. These procedures are necessary because, unlike most other businesses, a utility is . . . a natural monopoly.” 1

 

Summary of Our Arguments

In our appeal we contend:

• The decision unlawfully mandates smart meters as the only meter for DTE customers, because the opt-out meter is still a smart meter. The MPSC cannot mandate smart meters without statutory authorization. The MPSC has exceeded its lawful authority by enabling DTE to impose a de facto AMI (smart) meter mandate on its customers.
• There must be a benefit of the opt-out to the opt-out customer, because the customer is being charged. Neither the MPSC nor DTE presented any evidence of benefit. Because the opt-out program was specifically designed for customers with concerns about smart meters, and because it is those customers who will bear the cost of the program, there must be evidence that it benefits those customers. Moreover, the opt-out does not offer an opt-out from AMI (smart) meters. Rather, it puts a smart meter on the customer’s home and then causes the radiotransmitter to be disabled. The meter is still an AMI meter. Therefore the order is unreasonable.  Under the law, an unreasonable order must be reversed.

We request that the Michigan Court of Appeals:

• Reverse the May 15, 2013 order of the MPSC in Case U-17053 that approved DTE’s application to implement an AMI-meter opt-out program.
• Direct the MPSC to approve an opt-out that includes a non-smart-meter as an opt-out meter.
• Direct the MPSC to take and hear evidence on whether the AMI opt-out program benefits its prospective participants by adequately addressing their concerns about AMI meters such that they receive a benefit given in exchange for the corresponding initial and monthly opt-out fees.

Note that our appeal cannot ask that the court require an analog opt-out.  In part we cannot do this because the administrative law judge who heard our case (Dennis Mack) did not allow us to create an evidentiary record regarding this. What is meant by this is that he did not allow us to ask questions about the cost of analog meters, nor, for the most part, any other questions regarding them.

Once we win this case, we will need at least $25,000 to successfully prosecute our case before the Michigan Public Service Commission. We have come this far! Please reach into your pockets and donate as fully as you can!

 

Standard of Review

An commission order is subject to reversal if the party appealing the order can show that the order is unlawful or unreasonable. The appellant has to show this by clear and satisfactory evidence. The burden of proof is on the appellant.2 For more on the standard of review, see below.

 

Our Arguments

The Opt-Out Customer Does Not Benefit from the Opt-Out

In order for the Michigan Public Service Commission to approve a rate for a special class of customers, the utility must show that the service substantially benefits the customer. Otherwise, the rate cannot be approved. DTE did not present any evidence that its proposed opt-out program would benefit the customer. DTE limited its discussion of benefits to the supposed benefits of the AMI (smart meter) program in general, and repeated these supposed benefits ad nauseum throughout its testimony. It did not present even one shred of evidence as to the benefits of the opt-out program to DTE or to the customer. This is sufficient to cause the court to remand the case to the MPSC for a rehearing.

To get into the legal technicalities: The MPSC’s order is “unreasonable, ” because it is not supported by competent, material, and substantial evidence. To meet the “competent, material, and substantial evidence” standard, a cost-benefit analysis must be performed. None was. Therefore the order is unreasonable.  Under the law, an unreasonable order must be reversed.

DTE and the PSC Staff provided no evidence of how or even whether the opt-out would address customer concerns about AMI meters. DTE simply assumed that its opt-out program addresses customer concerns, without looking into whether it does so, and without presenting any evidence that it does so. There is no evidence that customers were solely concerned about the radiofrequency transmission to the utility. No survey of customers in Michigan was performed to query them about their preferences for the opt-out program.3 In fact, DTE’s witness stated that as of July 2012, DTE had received 1100 concerns regarding smart meters and that the majority of these related to health and data privacy. Yet DTE presented no evidence in the hearing that these concerns were being met by its opt-out program.

This paragraph is not in the brief, but is our editorial comment: The opt-out was supposedly being provided to address customer concerns about smart meters. Yet it is very, very clear that DTE had no intention of addressing customer concerns. It knew that an order from the MPSC was looming that would require it to offer an opt-out, and it chose to submit an opt-out program one month prior to issuance of that order, presumably to somehow get around any of the order’s content.

If the program does not address the customer’s reasons for seeking to participate in an opt-out program from AMI meter installation, one can be sure the number actually opting out will be artificially small and discontent. A customer opting out seeks to avoid receiving a smart meter, yet this opt-out program gives them one anyway, with one radio-transmitter disabled. It is true that DTE allows customers to join the opt-out program for any reason and does not even inquire as to the reason. However, this policy only works if the opt-out meter addresses the concerns of those opting out. If it does not, then there would be little benefit to opting out, but plenty of new fees.

Opt-out customers are, in fact, at a further disadvantage. If opt-out customers were to receive an analog meter, they would get a credit for the smart-meter-related capital expenditures. Instead, opt-out customers, who receive none of the supposed benefits of the smart meter program will nonetheless pay for it.4

Note also that in U-15620, the MPSC staff stated: “Staff supports the position . . . that investments in AMI be treated the same as any other capital expenditure in terms of each utility performing due diligence and justification of AMI investments by demonstrating adequate cost savings and improved customer service on a case-by-case basis.” [Emphasis added.] In the present case, neither DTE nor MPSC staff offered any of this evidence, and, in fact, the administrative law judge, DTE, and the MPSC worked concertedly to deny any attempt to submit evidence regarding or ask questions about whether such benefits might exist. DTE, of course, has then turned around and claimed in its reply to our brief that we failed to submit such evidence.

 

Testimony Is Aspirational

Without evidence that disabling one radio-transmitter adequately addresses the concerns of opt-out customers, substantial evidence of benefit is lacking. Consequently, the testimony concerning the number of complaints that DTE had received as of the date of its testimony about the installation of AMI meters and both experts’ participation estimates would be properly characterized as “aspirational.” The Michigan Court of Appeals, in a previous, and important, smart meter case, found against DTE because its testimony was aspirational and speculative. The court stated: “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.”5

 

Order is Capricious

Requiring that utilities set up AMI meter opt-out programs in one order (U-17000) order, and then requiring, in the present case (U-17053) that the customers choosing to opt out receive the same AMI meter they did not want, even with one of the transmitters disabled, is unreasonable and capricious when there is no evidence that disabling that transmitter will adequately address the opt-out customer’s concerns about AMI meters.6

 

No Statutory Mandate for Smart Meters as a Condition of Service.

DTE agrees that there is no AMI meter mandate in state or federal law for utilities or customers, but argues that it is free to require customers to receive AMI meters under its terms of service. However, by requiring customers to use a smart meter, albeit one with one of the radio transmitters turned off, DTE is requiring all customers to use smart meters. The MPSC approved DTE’s opt-out plan that requires all customers to use smart meters. No law has delegated to the MPSC the power to enable DTE to mandate that its customers receive smart meters. When an administrative agency acts outside of its statutory powers, it usurps the legislature’s role. By approving DTE's opt-out program, and by the existence of rules that force a customer to take a smart meter (whether or not the smart meter has one radio disabled) or have their service shut off, the MPSC is creating a de facto mandate.

There is an additional inference of a legislative intent indicating that AMI meters are voluntary. This can be derived from the statute protecting customers participating in a net metering program from having their power shut off solely on that basis. Cf. MCL 460.1173(4).

 

DTE’s Managerial Discretion Is Not Impinged on
If the MPSC Orders It to Use an Analog Meter

DTE contends that if the MPSC tells it to use an analog meter as the opt-out meter, the commission is making a managerial decision that is the utility’s prerogative. DTE cites to the case Union Carbide Corporation v Public Service Commission7,  as the basis for having the right to put whatever meter it wants on a person’s property.

We have a number of arguments against this proposition.

1. The MPSC may require a utility to provide a type or level of service. We contend that such a requirement does not involve management of the business by the commission because the manner of providing the service is left up to the utility. When the MPSC’s U-17000 order was entered, the MPSC exercised its right to order the utility to perform a kind or type of service while leaving the manner of performing the service up to DTE. Just because DTE decided to beat the MPSC to the punch by submitting its opt-out program a month before the MPSC issued its order does not mean that they type of meter DTE chose cannot be altered. The commission, in issuing the order, was telling the utilities to provide an opt-out.
2. The MPSC is required by law to see that a utility’s property “is maintained and operated for the security and accommodation of the public.”8 A Michigan Supreme Court case from 1944 holds that where the MPSC has a discretionary power, it must use it for the safety and accommodation of the public and cannot claim impotence.9
3. Union Carbide has heretofore applied only to things like power lines and power plants. It has not applied to equipment placed on a customer’s home or business. From a case against Consumers Power10, we can infer from the court’s decision that utilities do not have absolute dominion over utility property placed on customers’ homes.
4. A utility cannot sell or withhold service at will and has an obligation to meet customer needs.11

 

Supposed Lack of Analog Meters as a Reason for DTE to Mandate Smart Meters

In our brief, we point out the fact that more and more states and utilities across the country are requiring that the analog meter be the opt-out meter or are allowing the analog meter to be one of several meter-type options. We further point out that because of this, there is likely to be a market for analog meters and, therefore, that there will be a sufficient supply.

 

What the Court Can and Cannot
Take into Account When Reviewing Our Case

A commission order is subject to reversal if the party appealing the order can show that the order is unlawful or unreasonable. The appellant has to show this by clear and satisfactory evidence. The burden of proof is on the appellant. MCL 462.26(8).

Lawfulness. An order is unlawful

• when the administrative agency (MPSC) fails to follow a statutory requirement
•  when the agency abuses its discretion
•  if it is based on an erroneous interpretation of the law

Reasonableness. An order is unreasonable when

• it is not supported by the evidence

For citations to supporting law, see our brief and our reply brief,

 

Substantial Evidence

Substantial evidence is “any evidence that reasonable minds would accept as adequate to support the decision.”12 It is more than “a mere scintilla of evidence, but may be less than a preponderance of evidence.”13

 

Findings of Fact

When an agency engages in fact-finding, the courts will give deference to the administrative expertise of the agency and may not substitute its judgment for that of the agency. What this means is, if evidence was presented and the MPSC found that even only 1% of the evidence was in DTE's favor, then the court could not reverse the MPSC’s ruling. In our case, no evidence whatsoever was presented on the benefits of the opt-out program. Only benefits of the smart meter program were presented.

 

Courts Cannot Consider Economic and Policy Issues
When Reviewing the MPSC’s Order

Court’s must ignore economic policy issues when construing whether the MPSC acted within its statutory authority.  The court must also ignore the fact that, according to DTE, analog meters are no longer being manufactured. DTE may not experience all of the efficiencies of having a one-meter-type operation if it cannot mandate smart meters, but the court cannot take this into account when reviewing the order.

 

What We Have Asked the Court to Do
(Relief Requested)

We request that the Michigan Court of Appeals:

• Reverse the May 15, 2013 order of the MPSC in Case U-17053 that approved DTE’s application to implement an AMI-meter opt-out program.
• Direct the MPSC to approve an opt-out that includes a non-smart-meter as an opt-out meter. (The MPSC could include the current AMI opt-out meter, but it could not be the only opt-out meter.)
• Direct the MPSC to take and hear evidence on whether the AMI opt-out program benefits its prospective participants by adequately addressing their concerns about AMI meters such that they receive a benefit given in exchange for the corresponding initial and monthly opt-out fees.

We must note that our appeal cannot ask that the court require an analog opt-out.  In part we cannot do this because the administrative law judge who heard our case (Dennis Mack) did not allow us to create an evidentiary record regarding this. What is meant by this is that he did not allow us to ask questions about the cost of analog meters, nor, for the most part, any other questions regarding them. Very shortly into the hearing, he refused to allow any of the intervenors to ask questions regarding analog meters. DTE, in its reply to our brief, contends that no evidentiary record was created regarding analog meters. They are right. And the only reason such a record was not created was because the judge refused to allow it, and because DTE’s attorney, Michael Solo, continually objected to nearly every question raised regarding analog meters. The judge granted his objections, and thus no sufficient record was created.

We should also note that, should this case be remanded (sent back) to the MPSC, the nontransmitting AMI meter could be one of, but not the only, opt-out choice.

 

 

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1. Staff Rep at p 15-16, U-15620, Oct. 1, 2008, emphasis added. The MPSC’s 2012 Smart Meter Grid Collaborative report observed that this relationship could be fostered through case-by-case accommodation, something both the MPSC and the utilities have ignored entirely with regard to the opt-out.
2. MCL 462.26(8).
3. 4 Tr. 600:2-9.  (“Tr” refers to “transcript.” Thus, this is the 4th volume of the transcripts from the opt-out hearing, U-17053. The second number refers to the page (in this case, 600), and the last set of numbers refers to the line numbers on the page.
4. 3 Tr. 260, 273, 294:6-16.
5. In re Application of Detroit Edison Co to Increase Rates, 296 Mich App 101, 117; 817 NW2d 630 (2012), appealing MPSC case U-15768. This case is now before the Michigan Supreme Court. Linda Kurtz, one of the appellants in the DTE opt-out case, and David Sheldon were denied the ability to intervene in the appeal of this case.
6. In re Application of Detroit Edison Co to Increase Rates, 296 Mich App 101, 117; 817 NW2d 630 (2012), appealing MPSC case U-15768.
7. Union Carbide Corp v Public Service Commission, 431 Mich 135, 146; 428 NW2d 322 (1988).
8. MCL 460.556 (emphasis added).
9. Detroit v Public Service Commission, 308 Mich 706, 716–717; 14 NW2d 784 (1944).
10. Schultz v Consumers Power Co; 443 Mich 445; 506 NW2d 175 (1993).
11. Mich Consol Gas Co v Austin, 373 Mich 123, 138-39; 128 NW2d 491 (1964).
12. Battiste v Dep’t of Social Servs, 154 Mich App 486, 492; 398 NW2d 447 (1986).
13. In re Complaint of Pelland Against Ameritech Michigan, 254 Mich App 675, 685; 658 NW2d 849 (2003).

 

 

 

 

 

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