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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. 6315

August 27, 1985

ESCHEATED ESTATES:

Unclaimed utility refunds

PUBLIC SERVICE COMMISSION:

Authority over disposition of unclaimed utility refunds

The disposition of unclaimed utility refunds is governed by the Michigan Code of Escheats.

The Michigan Public Service Commission is not empowered to determine the disposition of unclaimed utility refunds.

Mr. Eric J. Schneidewind

Chairperson

Michigan Public Service Commission

6545 Mercantile Way

Lansing, Michigan 48909

You have requested my opinion regarding the Michigan Public Service Commission's authority to determine the disposition of unclaimed utility refunds, which inquiry may be stated as follows:

Does MCL 460.6b; MSA 22.13(6b), grant the Public Service Commission discretion to determine the disposition of unclaimed utility refunds, or are such unclaimed refunds governed by provisions of the Michigan Code of Escheats, MCL 567.11 et seq; MSA 26.1053(1) et seq?

The Federal Energy Regulatory Commission (FERC) permits interstate pipelines to increase the rate which local gas utilities pay for gas from interstate pipelines, pending a hearing on an application for formal approval of that rate increase. This increase is passed along by FERC from the pipeline to the utility, even though the increase may ultimately be disapproved. In the interim, based upon the tentative increase by the pipeline to the utilities, the Michigan Public Service Commission (MPSC) may allow an increase in the rate that the utilities charge consumers. In the event the tentative rate increase by a pipeline to a utility is ultimately disapproved, the pipeline refunds the excess charges to the utility. Thereafter, pursuant to MCL 460.6b; MSA 22.13(6b), the MPSC normally orders a refund to the consumers.

Experience has shown that some refunds addressed to consumers fail to reach them and they are returned to and are held by the utility. The Michigan Code of Escheats, MCL 567.11 et seq; MSA 26.1053(1) et seq, deals with the disposition of unclaimed property generally, and includes such unclaimed utility refund within the definition of 'property' subject to that Act:

"Property' means personal property, of every kind or description, tangible or intangible, in the possession or under the control of a holder, as hereinafter defined, and includes, but not by way of limitation:

. . .

'(xii) Amounts refundable from excess or increased rates or charges heretofore or hereafter collected by a corporation for utility services lawfully furnished by it, which have been or shall hereafter lawfully be ordered refunded to consumers or other persons entitled thereto and any interest due thereon, and which have remained unclaimed by the persons entitled thereto for 7 years from the date they became payable in accordance with the final determination or order providing for the refunds.' MCL 567.15(b)(xii); MSA 26.1053(5)(b)(xii).

Although MCL 460.6b; MSA 22.13(6b), provides that the MPSC may order refunds to gas utility customers, it is not authorized to order alternative or additional remedies. It is a well established rule of statutory construction that where specific powers are conferred, they may not be extended. 3 Sutherland Statutory Construction, (4th ed), Sec. 65.02, pp 149-151. An administrative agency, such as the MPSC, has no inherent power and may exercise only that authority delegated to it by statute. Blue Cross & Blue Shield of Michigan v Insurance Commissioner, 403 Mich 399, 431-432; 270 NW2d 845 (1978).

Case law evidences a strong public policy that refunds arising out of federal regulatory cases should be passed along to the ultimate utility consumers who have paid the higher temporary rates. Federal Power Commission v Interstate Natural Gas Co, 336 US 577; 69 S Ct 775; 93 L Ed 895 (1948); Natural Gas Pipeline Co of America v Federal Power Commission, 134 F2d 263 (CA 7, 1942). It has been held as a matter of law that the difference between the reduced rate and the former rate is the property of the ultimate consumer. Citizens Utility Co v City of La Junta, 121 Colo 261; 215 P2d 332 (1950). The state utility has been described as a mere conduit of funds belonging to the consumer. Public Service Co v City and County of Denver, 153 Colo 396; 387 P2d 33 (1963).

In a case involving similar issues, Cory v Public Utilities Commission, 33 Cal 3d 522; 658 P2d 749 (1983), certain utilities were ordered to refund over-collections to ratepayers. There, the utility commissioner sought to refund the unclaimed amounts in equal shares to all the then existing ratepayers. 658 P2d at 751. The California Supreme Court held that disposition of the unclaimed rate refunds was controlled by the California Unclaimed Property Law and stated that the remedy proposed by the utility commissioner would, in effect, 'repudiate the property rights of unlocated former customers, declare a forfeiture, and provide a windfall for current customers who have already received the full refund to which they are entitled.' 658 P2d at 752. In concluding, the court stated at 658 P2d 753:

'The Commission is not authorized to forfeit the refunds of the unlocated customers, and the property should be held for the benefit of the unlocated customers and for the use of the state in accordance with the Unclaimed Property Law. There is no more reason to allocate the unclaimed rate refunds to current telephone customers than there would be for a bank to allocate unclaimed property to its current customers.'

As discussed above, the Michigan Code of Escheats addresses the disposition of unclaimed utility refunds. The definition of 'property' specifically includes amounts refundable from excess or increased rates or charges collected by a utility which are ordered to be refunded. Thus, the Legislature has provided in MCL 567.63; MSA 26.1053, that escheated property is held by the Michigan Department of Treasury, as trustee and conservator for any person or persons who may be entitled to redeem the property.

It is my opinion, therefore, that MCL 460.6b; MSA 22.13(6b), does not grant to the Michigan Public Service Commission the discretion to determine the disposition of unclaimed utility refunds. It is my further opinion that such unclaimed refunds are governed by the provisions of the Michigan Code of Escheats, MCL 367.11 et seq; MSA 26.1053(1) et seq.

Frank J. Kelley

Attorney General


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