CARE Argues Against Unfair UPPCO Utility Rates before Michigan Court of Appeals

On May 11th 2018, counsel for CARE made its arguments challenging the Michigan Public Service Commission’s (MPSC) approval of UPPCO’s rates in the 2016 UPPCO rate case (U-17895) before the Michigan Court of Appeals. CARE argued that the Commission did not take into account the sections of the law that require all rates to be just and reasonable. Additionally CARE argued that the Commission did not include in its rate order an analysis of the affordability of the approved rates as required by MCL 460.12(14). Finally, CARE argued UPPCO violated one of the MPSC conditions when the Commission approved the sale of UPPCO from Integrys to the London Investment firm, Balfour Beatty. The condition included a stipulation that the sale would not negatively impact rates. However, in this case it was discovered that the new company reclassified the transaction from a stock sale to an asset transfer thereby causing a $70 million increase in the rate base. Because the utility earns a guaranteed return of approximate 7% on its rate base, this $70 million increase resulted in additional several million dollars every year that ratepayers must pay. On May 31, 2018, the Court of Appeals denied CARE’s appeal and affirmed the MPSC decision. Essentially the Court deferred to the MPSC’s determination of the various facts and legal challenges that CARE made. Nevertheless, CARE’s intervention in the case saved residential ratepayers approximately $3.4 million per year. Had CARE won at the appellate level, the savings would have been double.