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STATE OF MICHIGAN
COURT OF APPEALS


THE CITY OF HILLSDALE and THE HILLSDALE BOARD OF PUBLIC UTILITIES, Plaintiffs-Appellants, v

UNPUBLISHED January 3, 1997

No. 183249 Public Service Commission No. U-10562

MICHIGAN PUBLIC SERVICE COMMISSION and CONSUMERS POWER COMPANY,

Defendants-Appellees and MICHIGAN MUNICIPAL ELECTRIC ASSOCIATION and MICHIGAN SOUTH CENTRAL POWER AGENCY, Amici Curiae. _________________________________________ Before: Michael J. Kelly, PJ, and Hoekstra and E.A. Quinnell*, JJ. PER CURIAM. Plaintiffs appeal by right the January 26, 1995 order of the Public Service Commission rejecting a hearing officer's proposal for decision, and instead granting the application of Consumers Power for a certificate of public convenience and necessity to provide electrical service to two customers served by Hillsdale's municipal utility. We affirm.

* Circuit judge, sitting on the Court of Appeals by assignment. -1

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Hillsdale has operated a municipal utility for over 100 years. Since 1919 it has served Pittsford Township, where the customers at issue are located. Hillsdale is a small utility with approximately 5,436 customers. Its entire system consists of approximately 180 miles of overhead distribution lines and 10 miles of underground distribution lines. Hillsdale's total revenues in 1993 were $9,228.224. Consumers is a large investor-owned utility. Its revenues for 1993 were $2,077,275,482. In 1993 Consumers served over 1.5 million customers. The precise number of customers Consumers has in Pittsford Township and the extent of its distribution facilities in Pittsford Township is unknown. In 1991 Martin Grubbs purchased a house in Pittsford Township and formed Martin Manufacturing, located next door to the house. Both the house and company received electrical service from Hillsdale. Neither Grubbs nor Martin Manufacturing ever complained about the reliability of service from Hillsdale. In August or September 1993 Grubbs was informed by Hillsdale that he had been mistakenly charged too low a rate. Although Hillsdale did not seek recoupment of the lost revenue, beginning in September or October 1993 his rates were increased. Grubbs complained that given the new rates, he might not be able to afford to run all of his equipment and keep all of his current employees. When Hillsdale refused to provide any relief, Grubbs contacted Consumers about providing electrical service to his home and business. He learned that Consumers' rates would save him approximately $2,000 per year. He contacted Hillsdale and requested a release in order to switch to Consumers Power. Hillsdale refused. On March 14, 1994 Consumers filed an application with the PSC for a certificate of public convenience and necessity pursuant to 1929 PA 69, MCL 460.501 et seq.; MSA 22.141 et seq. (Act 69) to provide electrical service to the house and business. Section 2 of Act 69 provides: No public utility shall hereafter begin construction or operation of any public utility plant or system thereof nor shall it render any service for the purpose of transacting or carrying on a local business either directly, or indirectly, by serving any other utility or agency so engaged in such local business, in any municipality in this state where any other utility or agency is then engaged in such local business and rendering the same sort of service, or where such municipality is receiving service of the same sort, until such public utility shall first obtain from the commission a certificate that public convenience and necessity requires or will require such construction, operation, service or extension. Section 5 of Act 69 provides: In determining the question of public convenience and necessity the commission shall take into consideration the service being rendered by the utility then serving such territory, the investment in such utility, the benefit, if any, to the public in the matter of rates and such other matters as shall be proper and equitable in determining whether or -2

not public convenience and necessity requires the applying utility to serve the territory. Every certificate of public convenience and necessity issued by the commission under the authority hereby granted shall describe in detail the territory in which said applicant shall operate and it shall not operate in or serve any other territory under the authority of said certificate. Leave to intervene was granted to Hillsdale and the Attorney General. Following evidentiary hearings held on May 25 and June 27, 1994 the hearing officer issued a proposal for decision on September 9, 1994 in which he recommended that the application be denied. After noting the factors set out in

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