The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5481 April 11, 1979 PUBLIC SERVICE COMMISSION: Consumer protection rules PUBLIC SERVICE COMMISSION: Right to hearing prior to discontinuance of utility service CONSTITUTIONAL LAW: Right to hearing prior to discontinuance of utility service A customer of a utility is entitled to a hearing to resolve a billing dispute before a utility may discontinue utility services; conversely, because customer-initiated complaints regarding the quality or other aspects of service are not grounds for discontinuance of service by the utility, they do not trigger the right to a hearing before a utility hearing officer. Where a utility customer alleges that a utility is disseminating false information to its customers, a right to a hearing to determine this issue only arises if the alleged practice would have a significant impact upon the authority of the Public Service Commission to regulate rates, fares, fees, charges, services, rules or conditions of service of the utility. Honorable Gary G. Corbin State Senator The Capitol Lansing, Michigan You have asked for my opinion on the following questions: 1. Is a public utility customer entitled to a hearing before a utility hearings officer regarding the customer's bill or any other aspect of the customer's service? 2. What role, if any, does a utility company play in determining whether a hearing is to take place? 3. Is a public utility customer entitled to a hearing where the customer alleges that the utility is disseminating false information to its customers? 4. What relief is a customer entitled to if the allegations regarding dissemination of false information are correct? Your questions will be addressed seriatim: 1. Is a public utility customer entitled to a hearing before a utility hearings officer regarding the customer's bill or any other aspect of the customer's service? The opportunity for a hearing before a utility hearing officer, and the procedures governing such a hearing, were provided for by rules of the Public Service Commission pursuant to 1939 PA 3, Sec. 6; MCLA 460.6; MSA 22.13(6). In Memphis Light, Gas & Water Division v Craft, ---- US ----; 56 L Ed 2d 30; 98 S Ct ---- (1978), the United States Supreme Court held that the right to a hearing prior to discontinuance of utility service provided by state law or regulation is guaranteed by the due process clause of the Fourteenth Amendment. 1974 AACS R 460.2101, et seq established consumer standards and billing practices relating to electric and gas residential utility service, while 1977 AACS R 460.2211, et seq sets forth comparable standards and practices for residential telephone service. Examination of these rules indicates that the right to a hearing before a utility hearing officer arises when the utility claims there exists a valid reason for discontinuance of residential service and when that claim is disputed by the customer. The object and scope of such a hearing is therefore to determine whether there exists a valid reason for discontinuance of utility service. R 460.2161, which relates to residential gas and electric service, sets forth the following permissible reasons for discontinuance: '(a) Nonpayment of a delinquent account. '(b) Failure to post a cash security deposit or other form of guarantee. '(c) Unauthorized interference with or diversion or use of the utility service situated or delivered on or about the customer's premises. '(d) Failure to comply with the terms and conditions of a settlement agreement. '(e) Refusal to grant access at reasonable times to equipment installed on the premises of the customer for the purpose of inspection, meter reading, maintenance or replacement. '(f) Misrepresentation of identity for the purpose of obtaining utility service. '(g) Violation of any other rules of the utility on file with and approved by the commission which adversely affects the safety of the customer or other persons or the integrity of the utility's energy delivery system.' R 460.2162 states that the following are insufficient cause for discontinuance: '(a) The failure of a customer to pay for merchandise, appliances or services not approved by the commission as an integral part of the utility service provided by a utility. '(b) The failure of the customer to pay for concurrent service received at a separate metering point, residence or location. In the event of discontinuation or termination of service at a separate residential metering point, residence or location in accordance with these rules, a utility may transfer any unpaid balance to any other residential service account of the customer. '(c) The failure of the customer to pay for a different class of service received at the same or different location. The placing of more than 1 meter at the same location for the purpose of billing the usage of specific domestic energy using devices under optional rate schedules or provisions is not construed as a different class of service for the purpose of this rule. '(d) The failure of a customer, such as a landlord, to pay for service where service is used by another person, such as a tenant. A utility may discontinue service, however; '(i) If the customer supplies a written statement under oath that the premises are unoccupied. '(ii) If the premises are occupied, and the occupant agrees in writing to the discontinuation of service. '(iii) If it is not feasible to provide service to the occupant as a customer without a major revision of existing distribution facilities. Where it is feasible to so provide service, the utility, after providing notice as required in these rules, shall offer the occupant the opportunity to subscribe for service in his own name. If the occupant then declines to so subscribe, the utility may discontinue service pursuant to these rules. A utility shall not attempt to recover, or condition service upon the payment of, any outstanding bills or other charges due upon the account of any other person.' The rules establishing permissible reasons and insufficient cause for discontinuance of residential telephone service are virtually the same as those set forth above for residential gas and electric service. R 460.2255 and R 460.2256. Billing disputes are permissible subjects for hearing before a utility hearing officer because such disputes, if unresolved, may lead to discontinuance of service by the utility. Conversely, because customer-initiated complaints regarding the quality or other aspects of service are not grounds for discontinuance of service by the utility, they do not trigger the right to a hearing before a utility hearing officer. (1) 2. What role, if any, does a utility company play in determining whether a hearing is to take place? The role which a utility plays in determining whether a hearing before a utility hearing officer is to take place is essentially to assert, by issuance of a Notice of Discontinuation of Service, (2) the existence of a reason for discontinuance. If the reason is disputed by the customer and the parties are unable to resolve the dispute in a mutually satisfactory manner, the utility must afford the customer the opportunity for a hearing before a utility hearing officer. The hearing officer is employed by the utility and is a notary public and qualified to administer oaths. The customer must request the hearing within three days from the date the opportunity for a hearing is offered and the customer must pay the amount which represents that part of the bill not in dispute. R 460.2166 et seq; R 460.2261 et seq. If the hearing before the utility hearing officer does not result in a satisfactory resolution, either party may file an informal appeal with the Public Service Commission. R 460.2181 et seq; R 460.2271 et seq. The result of the informal appeal may in turn be reviewed through the Public Service Commission's general complaint procedure. See footnote 1. 3. Is a public utility customer entitled to a hearing where the customer alleges that the utility is disseminating false information to its customers? 4. What relief is a customer entitled to if the allegations regarding dissemination of false information are correct? As indicated above, a hearing before a utility hearing officer is not the proper forum for customer initiated complaints regarding the quality or other aspects of utility service. Likewise, unless a customer allegation of dissemination of false information were inextricably interwoven with a utility claim that service to the customer should be discontinued, the utility hearing officer could not pass upon the merits of the customer's allegation. A customer alleging a practice of dissemination of false information by a utility may, however, have a right to a hearing before the Public Service Commission. The right to such a hearing would arise if the Commission found that the alleged practice would have a significant impact upon the Commission's statutory jurisdiction '. . . to regulate all rates, fares, fees, charges, services, rules, conditions of service . . .' of certain utilities. 1939 PA 3, Sec. 6, supra. For example, the Commission requires utilities subject to its jurisdiction to file for public inspection the approved rates which may be charged for service as well as the rules governing other conditions of service. Furthermore, there are specific rules relating to the information which must be reflected on residential utility bills. R 460.2119; R 460.2226. Thus, a customer complaint that a utility is disseminating information in conflict with its approved tariffs or billing rules could result in a hearing before the Commission under the Commission's general complaint procedure. See footnote 1. The usual relief granted by the Public Service Commission upon a finding against a utility in a complaint proceeding is to require prospective change in utility conduct. The Commission has no authority to assess damages. Muskegon Agency Inc. vs General Telephone Company 340 Mich 472; 65 NW2d 748 (1954). However, the Commission may in a proper case order a refund of rates found to be unreasonable. Northern Michigan Water Company vs Michigan Public Service Commission 381 Mich 340; 161 NW2d 584 (1968). Such would be the case if the Commission determined that excessive rates had been charged by reason of a misapplication by the utility of its approved rate schedules. Frank J. Kelley Attorney General (1)
(2)
See R 460.2163, et seq for residential electric and gas service; R 460.2257, et seq for residential telephone service.