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The mission of the Michigan Public Service Commission is to formulate and administer policies and regulations necessary to ensure that regulated energy and communication and transportation services are provided in an efficient, reliable and safe manner sufficient to adequately meet the needs of Michigan citizens. The mission includes supporting a healthy economy and coordinating the state's policy, planning, and program activities related to energy, communication and transportation services.
The goals of the Commission are to:
The Michigan Public Service Commission is composed of three members appointed by the Governor with the advice and consent of the Senate. Commissioners are appointed to serve staggered six-year terms. No more than two Commissioners may represent the same political party. The Governor designates one Commissioner to serve as Chairperson.
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John G. Strand, ChairmanAppointed Chairman, November 1993, term ends July 1999; Member Committee on Electricity, National Association of Regulatory Utility Commissioners (NARUC); Former member of Committee on Gas, NARUC; Former Tribunal Judge for the Michigan Tax Tribunal; Former State Representative, Michigan House of Representatives; Former Assistant Prosecuting Attorney; Case Western Reserve University, J.D.; University of Pittsburgh, B.A. |
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David A. Svanda, CommissionerOriginally appointed December 1995, and reappointed 1997, term ends July 2003; Former Director of Administrative Services for Governor John Engler; Candidate for United States House of Representatives in Michigan's First District; Northern Michigan Representative for Governor Engler, Former City Manager, City of Marquette, Michigan; Member of the NARUC Executive Committee; Chairman of the NARUC Ad Hoc Committee on Mentoring and New Member Services ; Chairman of the NARUC Committee on Finance and Technology; FCC Local and State Government Advisory Committee; Treasurer of the Mid-American Regulatory Commissioners; Served on many national, state, and local boards; Maxwell Graduate School at Syracuse University, Master of Public Administration; Western Illinois University, B.A. Political Science/Urban Affairs. |
John C. Shea, Commissioner
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George Schankler, Director
517.334.6374
The Administrative Law Judges (ALJ) Division conducts hearings in contested cases according to applicable laws and administrative rules. Administrative law judges are responsible for scheduling hearings and filing dates, ruling on motions, presiding over hearings, and issuing a proposal for decision (PFD) at the conclusion of each contested case. Currently, there are five administrative law judges and two support staff.
During the year, the division conducted 421 days of hearings in contested cases and issued PFDs in 37 cases, and 147 settled or undisputed cases were processed and transmitted to the Commission for its approval. In addition to the normal array of rate cases, special contract applications, pipeline cases and licensing applications, administrative law judges chaired two arbitration panels, which recommended to the Commission resolution of interconnection issues between local exchange companies and new entrants into the local telephone service market. The resulting interconnection agreements will enable competing companies to provide local telephone service to the public.
Other significant cases dealt with disputes between telecommunications providers, a growing area as competing carriers enter the market, and establishing a framework for restructuring the electric generation and distribution industry. Numerous cases were processed to license new local exchange telephone carriers.
John Abramson, Director
517.334.6437
The Electric Division provides the Commission with technical assistance, recommendations and options on electric services and issues facing Michigan to strengthen Michigan's competitive environment and to ensure that electric service is provided in a safe, reliable and efficient manner. The ongoing restructuring of the electric industry has led to the development of programs and approaches designed to introduce competitive market concepts to utility regulation while continuing to meet utility customers' needs.
Commission Orders
During 1998, the Commission issued 121 orders which related to electric utility matters. These included orders authorizing tariff revisions or contract approvals, power supply cost recovery (PSCR) plan or reconciliation cases, complaints, or cases involving electric restructuring. An order issued by the Commission on December 28 in Case No. U-11726 required Detroit Edison to reduce its electric rates by $93.8 million, reduced the utility's stranded costs and removed the last impediment to open access.
Other Activities
The division coordinated 1998 and 1999 PSCR plan cases, 1997 PSCR reconciliation cases, and processed Times Interest Earned Ratio (TIER) reviews and earnings reviews. Staff completed bill comparisons and other tariff studies; applications for tariff changes and special contract applications. Quality of Service and System Performance and Maintenance programs were evaluated and monitored, and stray voltage issues and line extension disputes were reviewed and investigated. The division addressed numerous public inquiries on electric restructuring, electric company generation resource capacity plans, service reliability and outages, and stray voltage. The Electric Service Quality staff completed more than 4,506 customer contacts during the year, responding to a number of issues such as tree trimming, estimated electric bills, power outages, quality of electric service, and bill payment assistance.
Electric Industry Restructuring
Progress toward restructuring Michigan's electric utility industry continued in 1998, albeit slower than expected. In February, Consumers Energy and Detroit Edison filed their direct access tariffs. Transmission access will be available under tariffs regulated by the Federal Energy Regulatory Commission (FERC). Extensive public comments were received on the implementation plans for customer choice filed by both utilities. In December, electric utility restructuring bills were introduced in the Michigan legislature. The legislative session adjourned without a vote on the bills. As 1998 came to a close, the Commission directed Consumers and Edison to file reports on the status of FERC proceedings regarding implementation of customer choice. The Commission is presently reviewing the many issues raised in the implementation plans and comments.
Federal Activities
The division coordinated Commission intervention in several cases before FERC. A majority of the cases involved implications for the Michigan retail electric market from the FERC's implementation of its landmark Order 888, which mandated competition in the wholesale electric industry. Commission intervention also occurred in dockets related to Consumers Energy and Detroit Edison open access transmission tariffs; formation of the Midwest Independent Transmission System Operator (Midwest ISO); reliability procedures proposed by the North American Electric Reliability Council (NERC); classification of distribution and transmission facilities in the newly restructured national electricity grid; and the proposed merger of the American Electric Power Company and Central and Southwest Corporation.
In April and early May staff hosted a series of public meetings to review and discuss draft retail access implementation plans proposed by Detroit Edison and Consumers Energy. Staff issued comments on the draft plans in May; the utilities filed revised plans on June 30. Staff filed comments to the revised plans on August 10.
Meanwhile, in June, staff filed a "Staff Market Power Discussion Paper" pursuant to a June 5, 1997 order in Case No. U-11290, and a subsequent paper in December, "Developing and Implementing Codes of Conduct for the Retail Electric Industry" which built upon the earlier work.
Utility Mergers
Three mergers of utility companies or cooperatives were approved. The merger of the holding companies of Edison Sault Electric Company and Wisconsin Electric Power Company became effective May 31, 1998. The holding companies of Upper Peninsula Power Company and Wisconsin Public Service merged, effective September 29, 1998. Great Lakes Energy Cooperative, Top O'Michigan Electric Company, and Western Michigan Electric Cooperative merged into a single cooperative under the name Great Lakes Energy Cooperative, effective January 1, 1999. In addition, a merger is pending between AEP, of which Indiana & Michigan Power Company is a subsidiary, and Central and Southwest Power. None of these mergers have affected rates at this time.
| MICHIGAN ELECTRIC UTILITY STATISTICS (from company annual reports filed in 1998) |
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| Customer Reserved | Typical Monthly Use (Residential Class) |
Typical Monthly Bill (Residential Class) |
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| Company | Residential | Commercial | Industrial | Other | Total | ||
| Alpena Power | 12,979 | 2,925 | 5 | 192 | 16,101 | 500 kWh | $39.71 |
| Consumers Power | 1,417,168 | 175,314 | 9,203 | 1,784 | 1,603,469 | " | 42.64 |
| Detroit Edison | 1,859,432 | 177,088 | 1005 | 1,970 | 2,039,495 | " | 44.70 |
| Edison Sault | 17,928 | 3,184 | 4 | 40 | 21,152 | " | 31.40 |
| AEP (I&M) | 102,250 | 13,954 | 1,139 | 286 | 117,629 | " | 34.37 |
| Northern States Power-Wisconsin | 8,407 | 1,275 | 22 | 59 | 9,763 | " | 34.86 |
| Upper Peninsula Power | 55,723 | 6,499 | 9 | 165 | 62,396 | " | 42.37 |
| Wisconsin Electric Power | 7,684 | 876 | 7 | 23 | 8,590 | " | 30.67 |
| Cooperative | |||||||
| Alger Delta | 8,322 | 441 | 0 | 22 | 8,785 | " | 44.68 |
| Cherryland | 24,071 | 1,926 | 0 | 99 | 26,096 | " | 50.07 |
| Cloverland | 15,037 | 706 | 3 | 239 | 15,985 | " | 41.91 |
| Great Lakes | 37,662 | 1,525 | 88 | 210 | 39,485 | " | 48.61 |
| Midwest Energy - Fruitbelt | 24,140 | 564 | 172 | 0 | 24,876 | " | 38.20 |
| Midwest Energy - Southeastern | 4,411 | 202 | 11 | 28 | 4,652 | " | 41.21 |
| Ontonagon | 3,901 | 144 | 0 | 102 | 4,147 | " | 50.56 |
| Presque Isle | 26,884 | 1,395 | 3 | 349 | 28,631 | " | 49.77 |
| Thumb | 10,553 | 453 | 0 | 0 | 11,006 | " | 40.85 |
| Top O'Michigan | 46,927 | 927 | 10 | 207 | 48,071 | " | 49.77 |
| Tri-County | 20,374 | 938 | 3 | 127 | 21,442 | " | 50.23 |
| Wabash | Wholesale Only | ||||||
| Western Michigan | 11,448 | 288 | 0 | 71 | 11,807 | " | 51.58 |
| Wolverine | Wholesale Only | ||||||
| Total | 3,737,452 | 393,339 | 11,697 | 6,027 | 4,148,515 | ||
Michael Kidd, Director
517.334.6382
The Gas Division is responsible for providing the Commission with technical support and recommendations on issued related to natural gas production, purchase and delivery in Michigan. This is to ensure that regulated natural gas services are provided in a safe, reliable and efficient manner to meet the needs of Michigan citizens, enhance economic development and strengthen Michigan's economic environment.
During 1998, approximately 50 percent of the smaller commercial and residential natural gas customers in Michigan had the opportunity to choose an alternative supplier of natural gas. Commission orders issued during the year have expanded that level to over 90 percent for the years 1999 and 2000. Customer choice in the natural gas industry is now a reality. The Commission is proceeding at a deliberate rate to reform Michigan's natural gas utility rate structures and conditions of service to ensure the continuance of customer choice in a competitive natural gas environment.
Customer Choice Programs
SEMCO Energy Gas Company offered transportation service to all its commercial and industrial customers in response to a 1997 Commission order in Case No. U-11220. This was the first permanent program approved in Michigan to provide transportation service to small business customers. In September, the Commission approved a SEMCO request to expand its customer choice program to include all its residential customers, on an experimental three year basis. Under the expanded pilot program which begins April 1, 1999, 21,000 residential customers will be eligible to receive transportation services. As part of the program, the Commission also authorized the company to freeze its rates for three years, including its gas commodity rate of $2.99 per Mcf (thousand cubic feet) plus a $0.25 per Mcf balancing charge. The company also implemented an earnings sharing mechanism and instituted service quality standards.
Michigan Consolidated Gas Company also received approval to implement an expanded experimental pilot transportation program which allows for up to 75,000 eligible customers to enroll each year beginning January 1, 1999. This three year program permits up to 225,000 residential customers and up to 30 Bcf (billion cubic feet) of commercial and industrial customers gas usage to switch to alternative suppliers. MichCon's rates were frozen for three years including its gas commodity charge of $2.95 per Mcf. The program provides for the adoption of transportation standards of conduct which address transactions between the company and its marketing affiliates, service quality standards, and an earnings sharing mechanism.
Consumers Energy completed the first year enrollments in its expanded customer choice program during 1998 with 100,000 residential and business customers electing to switch to alternative gas suppliers. The company's expanded pilot program provides for an annual cap of 100,000 customers eligible to switch to alternative suppliers during each year of its three year program. Consumers' program also includes a frozen gas cost commodity charge of $2.8364 per Mcf, transportation standards of conduct, service quality standards and an annual earnings sharing mechanism.
| Residential Gas Choice Program |
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| Company | Participants |
| Consumers Energy Company | up to 300,000 customers * |
| Michigan Consolidated Gas Company | up to 225,000 customers |
| SEMCO Energy Gas Company | up to 21,000 customers |
Gas Cost Recovery
The Commission issued seventeen orders addressing gas cost recovery and reconciliation requests in gas cost recovery (GCR) proceedings. The primary focus in a GCR proceeding is to review a utility's gas purchasing practices for reasonableness and prudence and to reconcile allowable expenses with revenues collected from customers. The Commission suspended the GCR Clause for MichCon and SEMCO Energy Gas Company for three years, effective January 1, 1999 and April 1, 1999 respectively. The Commission froze and included the gas cost portion of their sales rates in the base rates at a $2.95 per Mcf and $3.24 per Mcf level respectively.
Utility Service Territories
The Commission issued thirteen orders for Act 69 certificates of public convenience and necessity. These orders involve a utility's request to provide service in an area already served by an existing natural gas utility. The Commission continued its policy allowing competing utilities to serve new customers in areas where they have a franchise provided this service does not create an undue safety concern. This allows customers a greater choice in determining their natural gas provider.
Title Transfer Complaint: Case No. U-11210 et al.
The Commission issued an order in the formal complaints filed by gas marketers against MichCon and Consumers Energy. The complaints alleged that rates initiated unilaterally by both local distribution companies (LDC's) for Title Transfer Services were subject to the PSC's jurisdiction and therefore were unauthorized and should be refunded. In its order the Commission concluded that although the answer was not free from doubt, under the facts presented on the record, the title transfer tracking service and fees were not subject to its regulation. The Commission found that marketers may choose not to transfer title or in the alternative they, or other third parities, could perform the same function and inform the utilities of the results. The Commission found that transportation of gas can continue without the title transfers and without the utilities tracking those transfers and therefore can be viewed as separate and distinct from the physical transportation of gas and not essential in providing transportation service.
Natural Gas Pipelines
The Commission issued twenty-five pipeline certificate orders including several for sour gas pipelines to connect shut-in gas to market. The most significant sour gas pipelines certificates were issued to Basin Pipeline. It received approval to construct and operate the thirty-two mile Manistee-Mason County Gathering System, the three mile Northwest Extension, the twenty-six mile Slocum Pipeline, the six mile Ferry Extension and the twenty mile Claybanks Extension. These pipelines are now in operation.
The Commission denied a request for a certificate of public convenience and necessity to construct and operate the Jordan Valley Pipeline System. This proposed pipeline would have traversed an environmentally sensitive area and for economic reasons was not practical.
In addition, Presque Isle Electric and Gas CO-OP received approval for the twenty-five mile-eight inch diameter Hillman Tie Line and the sixteen mile-eight inch diameter Atlanta Tie Line to improve the quality of the gas the utilities' distribute to their customers.
One major oil pipeline certificate was approved for the construction of a thirty-five mile-sixteen inch diameter pipeline. The pipeline, owned by the IPL Toledo Pipeline Company (now known as Enbridge), is located between its Stockbridge Station and its Freedom Junction Station in southeast Michigan. This pipeline will increase their interstate capacity to transport crude oil and other petroleum products to market.
The Commission also intervened in the Vector Pipeline and TriState Pipeline interstate cases filed at FERC. These competing pipelines are designed to transport natural gas from the Chicago, IL area to points in eastern Canada and the eastern United States. Either pipeline, if constructed, could have a beneficial impact on Michigan's economic development and improve the reliability of gas service in Michigan. They could also result in more fully utilizing the extensive natural gas storage assets within Michigan.
Natural Gas Production
The division's Petroleum Engineering Section processed 476 gas well connection permits. Ninety seven percent of these new wells involved production of gas from the Antrim formation. Antrim production accounted for approximately 73 percent of the 271 billion cubic feet (Bcf) of natural gas production during 1998.
Pipeline Safety
The division's Pipeline Safety Section conducted 710 inspections of natural gas transmission and distribution operators, issued fifty-four notices of probable safety code non-compliance and investigated twenty-four natural gas incidents. The Commission commenced a rulemaking proceeding to revise the Michigan Gas Safety Code which will significantly restructure the Code by incorporating, by reference, the minimum federal safety standards. Work also began on developing proposed safety standards for pipeline operators that transport gas containing hydrogen sulfide or sour gas.
Service Quality
The division's Service Quality Section handled over 12,500 customer and company contacts regarding gas service in Michigan. These contacts included informal and formal complaints, consumer inquiries about gas utility billings, service, deposits, disconnects, payment arrangements/settlement agreements, hearings, and other matters such as gas utility customer choice programs, customer attachment programs, and non-regulated services. Staff also assisted in addressing issues related to the Commission's billing practices for residential and commercial gas customers, provided utility-related information to a variety of consumer groups, and public and private agencies, and continued its assistance customizing the Commission's computer software program for recording and retaining complaints and inquiries.
| NATURAL GAS CUSTOMERS SERVED 1998 |
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| Residential
Space Heating Average |
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| Company | Residential | Commercial | Industrial | Transportation | Total | Annual Usage | Annual Bill |
| Aurora Gas Co. | 1,306 | 123 | 0 | 0 | 1,429 | 1261 Ccf | $862.34 |
| Battle Creek Gas Co. | 32,591 | 2,142 | 4 | 58 | 34,795 | 1250 Ccf | $726.56 |
| Citizen Gas Fuel Co. | 12,656 | 1,072 | 29 | 9 | 13,766 | 1251 Ccf | $725.25 |
| Presque Isle Gas & Elec. | 1,960 | 204 | 0 | 0 | 2,164 | 1290 Ccf | $670.24 |
| Consumers Energy** | 1,429,133 | 101,932 | 7,962 | 2,944 | 1,541,971 | 1020 Ccf | $483.51 |
| Michigan Consolidated Gas Co. | 1,090,354 | 80,298 | 818 | 842 | 1,172,312 | 1350 Ccf | $675.00 |
| Michigan Gas Utilities | 132,193 | 11,799 | 371 | 135 | 144,498 | 1070 Ccf | $623.00 |
| Northern States Power-Wisc. | 4,297 | 605 | 0 | 10 | 4,912 | 1358 Ccf | $672.00 |
| Peninsular Gas Co. | 3,461 | 369 | 37 | 1 | 3,868 | 1390 Ccf | $780.26 |
| Peoples Natural Gas | 0 | 0 | 0 | 1 | 1 | N/A | N/A |
| Semco Energy Co. | 187,405 | 18,236 | 658 | 193 | 206,492 | 1215 Ccf | $680.30 |
| Wisconsin Public Service Co. | 4,659 | 453 | 0 | 13 | 5,125 | 1503 Ccf | $632.21 |
| TOTALS | 2,900,015 | 217,233 | 9,879 | 4,206 | 3,131,333 | 1269 Ccf | $684.60 |
| ** Note: 102,000 customers (92,000 residential and 10,000 small industrial and commercial), are participating in the customer choice program. | |||||||
William Celio, Director
517.334.6380
The Communications Division is responsible for providing the Commission with technical assistance and recommendations on communications issues in Michigan.
The division's primary activities focused on administering the Michigan Telecommunications Act (MTA), 1991 Public Act 179, as amended. The MTA continues efforts to improve opportunities for economic development by: encouraging competition, introducing new services and technologies, and streamlining the traditional regulatory process:
Local Telephone Competition
The city of Coldwater became the first Michigan municipality to receive a license to provide basic local telephone service to its residents. The Commission granted competing licenses and/or approved amendments of existing licenses to 20 companies during the year. The rapidly growing list of companies receiving licenses or approval to expand their service areas included: Accelerated Connections, Inc., Baraga Telephone Company, City of Coldwater, Dakota Services, Ltd., Dieca Communications, Inc., Focal Communications Corporation of Michigan, Group Long Distance, Inc., Level 3 Communications, LLC, Media One Telecommunications of Michigan, Inc., MetroNet Telecom, Inc., MichTel, Inc., Mid-American Telephone Company, NextLink Michigan Inc., Northpoint Communications, Inc., NOW Communications, Sterling International Funding, d/b/a Reconex, Suretel, Inc., UniDial Communications, Inc., United States Telecommunications, Inc., U.S. West Interprise America, Inc. Through 1998 the Commission has licensed fifty one competitive local exchange providers, amended licenses of 14 competitive local exchange providers and amended licenses of 4 incumbent local exchange providers.
Local Exchange Service Rate Rebalancing
Ameritech exercised its statutory rights to raise certain business and residential basic local exchange services and interzone rates by 1.75 percent, effective January 15, 1998, pursuant to the Michigan Telecommunications Act of 1996 Consumer Price Index (CPI) formula.
Provisions of the MTA require local telephone service providers to restructure their basic local telephone service, toll and access rates by January 1, 2000, so that rates will not be less than the total service long run incremental cost of providing each service. On November 5, 1998 the Commission approved Ameritech's fourth application, filed August 7, to restructure its rates. Similarly, thirty-four providers of local exchange service in Michigan received Commission approval to restructure their rates. The rate increases will vary for telephone customers depending on the local telephone service provider. No company will increase rates above Ameritech Michigan's or GTE North's weighted average basic local exchange rates.
Service Cost Methodology
The Commission considered companies' total service long run incremental costs in TSLRIC study cases. On January 28, 1998 the Commission approved a joint total service long run incremental cost study for the Michigan Exchange Carriers Association (MECA) companies.
Further, the Commission issued rehearing orders on January 28, 1998 and June 26, 1998 for Ameritech Michigan's initial total service long run incremental cost study. These orders resulted in a fine tuning of the Commission's initial order in this matter issued July 14, 1997.
On October 8, 1998 Chatham Telephone, Communications Corp. of Michigan, Island Telephone, Shiawassee Telephone and Wolverine Telephone filed an application requesting approval of five separate long run incremental cost studies. The Commission granted approval of the studies, with modification, on January 6, 1999.
The Commission also initiated two proceedings on November 5, 1998 to consider the total service long run incremental costs for all access, toll and local exchange services provided by Ameritech Michigan and GTE North Incorporated. This action placed into motion the Commission's schedule to review the second biennial cost study required to be filed for each company in January 1999.
Commission Slamming Protections
On September 23, 1998 the Commission issued an order approving procedures to protect telephone customers against having their telephone service switched to other service providers without the customers permission, a practice commonly known as slamming. The procedures were issued pursuant to Public Acts 259 and 260 of 1998. Included among the provisions of the acts were penalties of up to $50,000 for violation of the procedures. In its order of September 23, 1998 the Commission also recognized that additional steps might be needed to fully eradicate slamming and, on October 7, 1998, initiated follow-up proceedings.
Mediations and Arbitrations
The Federal Telecommunications Act of 1996 permits resolution of interconnection and other issues by negotiation, mediation, and arbitration between an incumbent local telephone service provider and competing providers. Interconnection allows customers of the competing local telephone service provider to place calls to, and receive calls from customers of other local telephone service providers.
The Commission approved the listed arbitrated interconnection agreements and negotiated interconnection contracts.
Arbitration Agreements
- Ameritech and LCI
- Ameritech and AT&T Communications of Michigan, Inc. (amended)
Negotiated Interconnection Contracts
- Ameritech and Incumbent LECs
- Ameritech and US Xchange
- Ameritech and KMC Telecom, Inc.
- Ameritech and GTECC
- Ameritech and Level 3 Communications
- Ameritech and Teligent Inc.
- Ameritech and Media One
- Ameritech and US West Interprise
- Ameritech and NPI Wireless (cellular)
- Ameritech and Centennial Cellular (cellular)
- Ameritech and Gilro Cellular (cellular)
- Ameritech and Lake Huron Cellular (cellular)
- GTE and Incumbent LECs
- GTE and Incumbent LECs/Brooks (EAS)
- GTE and WinStar
- GTE and Allendale
- GTE and Ameritech Cellular (cellular)
- GTE and Nextel (Onecomm) (cellular)
- GTE and Centennial et al. (cellular)
Payphone and Operator Service Providers
The MTA requires all payphone and operator service providers (OSP) in Michigan to register with the Commission. Accordingly, staff registered 164 payphone providers and 60 OSPs.
Division staff also received about 55,000 calls to the Commission toll-free number for customers to report out-of-service payphones. Staff notified affected payphone service operators of the reports.
Staff inspected payphones throughout the state to determine payphone provider compliance with the MTA provision that requires posting of certain information on all payphones. Nationwide Communications, Inc. paid $17,500 on June 26, 1998 for fines and costs related to violations of payphone posting requirements.
Service Quality
Contact volume grew to more than 16,000 in 1998, a significant increase over previous years. The highest volume of contacts concerned slamming with various billing questions close behind. Increased application of technology helped staff deal more effectively with the increased call volume.
Electronic Bulletin Board/Web Site
The division also assisted in maintaining the MPSC electronic bulletin board and web site. In 1998 Ameritech tariffs and Michigan 9-1-1 surcharge information were added to the web site.
9-1-1 Emergency Services
In Case No. U-11229 the Commission ordered Ameritech Michigan to remedy deficiencies in its 9-1-1 database. Ameritech has engaged in ongoing efforts to remedy such deficiencies. Fines are paid in noncompliance determinations. Ameritech paid $156,000 in fines during 1998 and has paid $262,000 in fines since issuance of the Commission order on September 30, 1997.
Financial Review
Staff reviewed lifeline tariffs submitted by each local telephone provider. The tariffs reflect changes in the formula for Lifeline subscribers in both federal and state laws.
Thomas R. Lonergan, Director
517.334.6389
The Motor Carrier Regulation Division provides the Commission with technical assistance and policy recommendations on commercial motor and water carrier issues in Michigan. The Commission administers the Motor Carrier Act which provides for the safety and insurance regulation of the intrastate for-hire trucking industry, referred to as motor carriers. The Commission also regulates the rates and services of motor carriers of household goods and the rates of water carriers (ferry boats) except when under local or federal government jurisdiction.
Certificates to New Motor Carriers
The division issued 450 certificates to new motor carriers continuing the significant increases that have occurred annually since 1995 when Congress passed legislation preempting certain restrictive state and local government regulation of rates, routes, and services of motor carriers. Motor carriers wishing to do business within Michigan must first obtain an MPSC certificate. The certificates are issued upon verification that the motor carrier is in compliance with applicable safety laws and has provided proof of proper liability insurance.
Applications
The division processed 618 applications of all types. All applicants were reviewed for compliance with state and federal safety requirements. In addition, staff issued 51,129 intrastate motor vehicle decals. Staff processed over 4,950 insurance filings as well as an additional 2,291 insurance cancellation notices. The Commission collected over $4.8 million in fees from intrastate motor carriers.
Safety & Compliance
The division, through its Safety & Compliance Section, is responsible for enforcing the safety and fitness of Michigan Motor Carriers. In 1998, staff received and investigated 67 complaints. Staff intervened in ten contested cases, successfully opposing grants of authority for carriers with hours of service violations, forged medical cards, sales tax fraud, and other safety and licensing problems. Staff advised 301 carriers of insurance violations, sixty-four of which resulted in formal complaints filed against carriers for failure to maintain insurance. The division had over 1,000 informational contacts with Michigan motor carriers about the United States Department of Transportation/Michigan safety regulations and conducted 450 safety reviews of new and transfer applications. Staff filed seven formal complaints against MPSC certificated carriers possessing unsatisfactory USDOT safety ratings. The unsatisfactory rating calls into question the carrier's ability to provide safe transportation services in Michigan in compliance with the Michigan Motor Carrier Safety Act and Michigan Motor Carrier Act. Staff met with each carrier requiring proof that it has taken steps to upgrade its safety rating to satisfactory.
Staff reviewed forty-one tariffs filed by household goods motor carriers and conducted five compliance audits of moving companies. There was one contested general rate filing by the Michigan Mover's and Warehousemen's Association on behalf of its 150 member motor carriers. In September, the Commission approved a 2 percent cost-of-living increase for the member motor carriers.
Single State Registration System for Interstate Carriers
The division also registered over 519,000 interstate vehicles and received over $2.5 million net revenue in 1998 while administering the Single State Registration System. Interstate motor carriers conducting operations in Michigan are required to pay a fee ranging from $0 to $10 and to register their federal authority as well as provide proof of insurance with the State in which their operations are based. Staff also registered over 787,000 vehicles and collected in excess of $4.5 million for other states in the SSRS program from motor carriers claiming Michigan as their base state. Over 1,100 applications were processed for motor carriers that operate in Michigan and haul commodities exempt from Federal Highway Administration regulation but are considered interstate.
Other Activities
Staff also participated in the activities of the Motor Carrier Advisory Board and the Michigan Highway Reciprocity Board. The division, in a joint venture with the Federal Highway Administration, Departments of Transportation, State Police, Treasury, and State requested and received a $540,000 federal grant to begin work on coordinated state programs which will allow electronic filing and issuance of credentials to motor carriers as well as provision of on-line credential and safety data to enforcement officers at the roadside. In 1998, a contractor was obtained for development of the network system architecture. Staff also continued to work with the Departments of State and Transportation to implement a "one-stop shop" for all truck licenses and permits.
Finally, the division is working through the National Conference of State Transportation Specialists with the Federal Highway Administration and the American Trucking Association in support of a proposed rulemaking which would consolidate several federal and state credential and fee collection systems that impact motor carriers, potentially leading to significant savings and efficiencies for both government and the motor carrier industry.
Hasso Bhatia, Director
517.334.6376
Technical Services Division (TSD) administers ongoing programs and provides expertise to the Commission and other divisions on economic, financial, statistical, accounting, engineering, depreciation and energy forecasting matters. The division provides technical assistance through rate case participation, compliance audit functions, reports and special projects, analyses of a wide range of energy and regulatory issues, settlement negotiation, and through Commission, state and federal; task force participation.
Division staff reviewed and processed four accounting orders dealing with environmental clean-up expenses, records relocation, associated company transactions, and cost amortization. Staff also reviewed and processed four foreign utility certification requests for PUHCA compliance. TSD staff submitted rate of return testimony in a major rate case and performed an asset-impairment study in Detroit Edison's Fermi II accelerated amortization case. Division personnel also reviewed a request for performance based rate making and prepared composite price index and productivity recommendations. In support of a Department of Environmental Quality ability-to-pay determination involving a Michigan regulated utility, staff prepared a technical financial review involving a projected cash flow study, projected financial statements and an estimate of the value of the utility.
The division commenced a major round of compliance audits focused on transactions between regulated electric and gas utilities and their unregulated "sister" companies (affiliated transactions). Staff completed one audit and prepared a formal audit report and completed field work on a second compliance audit. An audit was also performed on the energy conservation expenses of Detroit Edison's final three year conservation program.
Division staff continued to provide the Commission with regular financial reviews of the utility industry, preparing quarterly reports highlighting the financial performance of Michigan utilities and economic and financial trends that affect the reliability and financial condition of regulated utilities. Staff also prepared a detailed financial review of non-utility and foreign utility investments made by Michigan utilities and their affiliates. Staff explored more efficient methods for Michigan utilities to file their annual reports and began experimenting with electronic filings. In addition, TSD prepared the annual public utility revenues assessment as required by Public Act 299 of 1972.
TSD also participated in the Commission's electric restructuring initiative. This included summarizing Commission orders for the history of Michigan electric restructuring, review of utility implementation plans, and participation on the Choice Advisory Council. Additionally, division staff participated in activities related to stranded costs of Detroit Edison's Fermi 2 nuclear plant.
TSD staff completed three depreciation cases; Consumers Energy depreciations rates, nuclear plants' decommissioning funds, and the Ludington Pump Storage Project. A Detroit Edison depreciation case was commenced in 1998 with briefing scheduled for 1999. A project was initiated with Detroit Edison Company to decrease the company's un-unitized plant balances, which should reduce unnecessary data and provide timely information for depreciation studies. The program goal is to improve management of fixed assets as accounting records more closely reflect plant in service.
Consumers Energy successfully completed the first year of decommissioning its Big Rock Point nuclear power plant. Staff has made inspection tours of the site and met quarterly with the Consumers' plant decommissioning staff to review the progress of plant dismantling.
Division staff continued to develop and maintain several data bases that provide technical information to the Commission, the Michigan Treasury Department, the federal government, the public, and other states. Some of the data bases cover non-utility generators operating in Michigan, sales and purchases of electric power plants in the US, and nuclear decommissioning funds. TSD staff prepared biannual reports that allocated to other states required payments to and earnings of the spent nuclear fuel permanent storage fund. The Department of Energy actively manages the funds that have been created by utilities' payments. Michigan's payments and earnings totaled $185 million as of June 1998.
The division studied past and expected future trends of energy use, supply, and prices, prepared long-term electricity sales and peak demand forecasts and provided analysis of system and sector load shapes. There was concern in the spring of 1998 that electric generation resources might not be adequate to meet summer demand, and division staff reviewed capacity plans which were submitted by utilities. Under a federal grant staff also began a review and update of the State's Energy Emergency Plans.
During the spring and fall of 1998, staff published the Michigan Energy Appraisal, provided forecasts of the adequacy of Michigan electric, natural gas, gasoline, diesel fuel and home heating oil supplies. The division also conducts a bimonthly residential heating oil and propane price survey, under a grant from the federal Energy Information Administration (EIA).
The division prepared a statistical analysis of utility customers' complaints and developed a system for tracking complaints by company. TSD staff developed statistical measures of performance factors for Commission-wide activity. These measures are used to assess agency performance and track quality improvement plans.
The division provides agency-wide support for computer systems operations, applications, planning, and coordination of Year 2000 activities. Major computer equipment and systems have been upgraded to meet Y2K compliance requirements. The Commission's world wide web site computer server has been upgraded to meet the increased site access and Y2K compliance. Staff has surveyed energy and communication utilities to assess their Y2K compliance, and has begun working with the Department of Management and Budget and State Police Emergency Management to assess utilities' Y2K compliance status and develop contingency plans for the Year 2000.
Staff continued to chair the interdivisional task force that manages the Energy and Regulatory Matters Information Service (ERMIS) and the Commission's world wide web site. Working with the Executive Secretary Division, TSD staff provided technical support in designing a web-based system that will allow companies and other parties to file case information with the Commission over the Internet for a pilot study in 1999.
Dorothy Wideman, Director
517.334.6983
The Executive Secretary Division is responsible for maintaining and issuing official Commission documents; securing all official records of the Commission; providing consumer outreach and education on natural gas, electric, and telephone issues to Michigan utility customers; and coordinating communications with the media and the public.
Staff processed all official pleadings filed with the Commission and distributed all notices, Commission orders and other official documents to parties, subscribers, etc. Staff continued work on an effort to test the advantages of electronic filings at the Commission. The pilot effort will permit Commission staff, participating utility companies, and parties intervening in cases to submit pleadings and other documents to the Commission in an electronic format. The Technical Services Division is providing technical assistance on the project. Implementation is scheduled in early spring 1999.
For the eleventh year, the Commission held statewide consumer forums. Muskegon, Clare, Menominee, Flint, Farmington Hills, and Detroit hosted forums. Staff made presentations on various utility topics to nearly a dozen senior citizen centers, community action agencies, and other business and community groups and conferences. Through out the year, staff helped to keep the state's consumers informed of Commission authorities and operations, telephone issues, bill payment assistance resources, energy saving options, and other utility matters.
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Case Document Processing
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| Pleadings (applications, complaints, testimony, exhibits, interventions, motions, briefs, leaves to appeal, proposals for decision) |
6,800
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| Notices of Hearing/ Notices of Opportunity |
150
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| Commission Orders |
332
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Staff developed several issue specific brochures and consumer alerts. Nearly forty thousand copies of fourteen new alerts were distributed to radio, cable and television stations, newspapers, libraries, statewide organizations, business associations, senior centers, local offices of the Family Independence Agency, and other interested consumers. Among the new brochures distributed were "Shedding Some Light On Electric Restructuring," "Home Heating Help," and "It's Your Choice – What Consumers Should Know About Natural Gas Choice." Staff distributed 57,037 Commission brochures, including new brochures, to consumers, utility companies, community service organizations, and businesses.
Weekly, staff compiled and issued reports of contact from consumers with various utility complaints or concerns. The weekly reports provided detailed data on slamming, operator service providers, Caller ID, 900 numbers, billing errors (cramming), Lifeline Telephone Assistance Program, Home Heating Credit, rate case process, and gas customer choice. Staff mailed copies of alerts, brochures and/or press releases related to the customer's specific complaints/concerns to nearly 1,100 consumers.
Staff assisted in the ongoing development and maintenance of the Commission's web site. Nearly 120,000 e-mail messages were automatically sent to subscribers to Commission schedules, agendas, press releases, and meeting minutes. Staff's web site maintenance activities included, among other things, uploading Commission meeting minutes, press releases, daily listing of documents filed with the Commission, weekly listings of new cases filed with the Commission, notices of hearings, notices of opportunities to comment, brochures, and consumer alerts.
Additionally, staff coordinated or issued other reports including the monthly, quarterly, and annual summaries of consumer contacts handled by Service Quality Section staff of the three operating divisions and the Executive Customer Assistance Centers and prepared monthly summaries of Customer Assistance Program reports. Staff assisted in developing of the electric restructuring Report on Customer Focus Issues and Recommendations, and reviewed the restructuring implementation plans filed by utility companies; staff administered the Customers Have Options In Choosing Electricity (CHOICE) Advisory Council, which has a mission to develop a statewide information and awareness campaign on electric restructuring.
Further, staff participated on the committee that reviewed thirty-five proposals, to select business recipients to receive grants of up to $5,000 to conduct education workshops on electric restructuring/electric choice, energy efficiency for home heating ratings, photo voltaic and wind demonstration displays, green commuting, and K-12 projects.
Staff also served as a member and participated in the activities of the Coalition to Keep Michigan Warm, Senior Advocates Coalition, Inter Agency Coalition, Senior Exploitation Quick Response Team, and the Society of Consumer Affairs Professionals in Business.
Nearly 30,000 consumers placed calls to the Commission on telephone, natural gas, electric, motor carrier, and miscellaneous or non-utility issues. Staff directed the customers to appropriate MPSC personnel or outside organizations and agencies.
Staff issued sixty-two press releases announcing decisions on seventy-one Commission orders or actions and in several cases consolidated certain press releases to include two or more like cases. The press releases provided information on a broad range of issues, including: electric industry restructuring, licenses and interconnection agreements for competitive local telephone exchange providers; procedures developed to protect consumers against telephone slamming; experimental natural gas customer choice programs; primary interexchange carrier charge (PICC) rates; certificates of public convenience and necessity for construction and operation of natural gas pipelines; incumbent local telephone carrier rate restructuring; The Detroit Edison Company's Fermi 2 Nuclear Generating Plant accelerated amortization and $93 million rate reduction; and the Michigan Emergency Electric Procedures manual.
Staff furnished information and data to 503 media contacts on issues ranging from electric industry restructuring; local telephone competition; slamming, cramming, and other telephone problems; the proposed Ameritech Michigan/ SBC merger; natural gas customer choice programs; reversible billing; proposed and approved natural gas pipelines; consumer complaints on power outages; home heating assistance programs to PICC.
Staff also prepared and issued the 1997 Annual Report of the Michigan Public Service Commission to the Governor and Legislature in March.
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