LANSING, July 25.  In a unanimous decision issued today, the Michigan Court of Appeals 
upheld a Michigan Public Service Commission decision that allowed Consumers Energy 
Company to refinance its assets through a process known as securitization.  

On October 24, 2000, the Commission concluded that allowing securitization would reduce 
costs to the utility's customers by $58.7 million.  Attorney General Jennifer M. Granholm 
appealed that decision.

In rejecting the Attorney General's arguments, the Court stated that there "was no dispute in 
the proceedings before the PSC that securitization will result in an annual cost savings of 
$58.7 million, $8.9 million more than the amount necessary to offset the five percent 
residential rate reduction mandated by the statute."  

The Court also concluded that "the record clearly demonstrates that securitization results in a 
tangible savings to electric customers." 

The court noted that the Attorney General "improperly" used an inconsistent methodology to 
support her conclusion that there were no benefits to ratepayers from securitization. Instead, 
the court found that the Commission's methodology was entitled to deference because it was 
consistent with the "plain language of the statute."

"The Commission is pleased that the Court of Appeals has acted expeditiously to uphold its 
decision to permit refinancing to reduce costs to all customers of Consumers Energy," said 
Attorney Thomas Woods, who represented the Commission in the case. Commission 
Chairman Laura Chappelle agreed.  "This opinion recognizes that Michigan carefully crafted 
an electric restructuring law that brings savings to customers to the fullest extent possible.  
Today's decision moves us one step closer to our goal of making utility rates more 
competitive and improving Michigan's economy," said Chappelle.

The Commission's order was authorized by the Customer Choice and Electric Reliability Act 
passed by the Legislature and signed into law by Governor Engler in June 2000.  That act 
required a 5% residential rate reduction to be funded by the refinancing.  Non-residential 
rates would also be reduced if the savings from the refinancing were sufficient.  The 
Commission concluded that the $58.7 million savings were adequate to fund the entire 5% 
residential reduction with $8.7 million of additional cost savings.  

The MPSC is an agency within the Department of Consumer and Industry Services.

July 25, 2001
(Appeals Court upholds decision to allow refinancing of Consumers Energy assets to fund 
5% rate reduction for customers)