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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)



Opinion No. 6464

September 4, 1987


Const 1963, art 4, Sec. 24--validity of enactment authorizing energy conservation programs


Loans by utilities maintaining energy conservation programs

1939 PA 3, Sec. 6c, which limits the authority of utilities maintaining energy conservation programs to make loans to residential customers to not later than June 30, 1987, was enacted in conformity with Const 1963, art 4, Sec. 24.

Honorable H. Lynn Jondahl

State Representative

The Capitol

Lansing, Michigan 48913

You have requested my opinion on the question whether MCL 460.6c; MSA 22.13(6c), is constitutional under Const 1963, art 4, Sec. 24.

The Legislature enacted 1978 PA 211 to amend 1939 PA 3, MCL 460.1-460.8; MSA 22.13(1)-22.13(8), to add Sec. 6c to authorize the Public Service Commission, hereafter the PSC, to approve energy conservation programs for residential customers of electric and gas utilities. Sec. 6c(1). The costs of money, bad debt expense, administrative costs, and the costs of residential energy audits pursuant to an energy conservation program could be included in the general rates of the utility, but these costs would not be included once the approved energy conservation program costs of the utility had been recovered. Sec. 6c(2). The Commission was authorized to promulgate rules and standards to implement the program. Sec. 6c(5). 1979 MAC, R 460.2401-460.2414, were adopted by the PSC and became effective August 16, 1979. It is noted that R 460.2412 made residential customers who are owners of the residence in which they live and who are current in payment of utility bills eligible for loans from the utility offering loans.

In subsection (6) of MCL 460.6c; MSA 22.13(6c), the Legislature provided:

"Five years after the effective date of this section, a utility company maintaining an energy conservation program permitted under this section shall not make a loan as part of that program." (Emphasis added.)

Act 3, Sec. 6c, became effective on June 5, 1978.

It is noted that 1978 PA 211 also amended the title of Act 3 to provide:

"An act to provide for the regulation and control of public utilities and other services affected with a public interest within this state; to create a public service commission and to prescribe and define its powers and duties; to abolish the Michigan public utilities commission and to confer the powers and duties vested by law therein on the public service commission; to provide for the continuance, transfer, and completion of certain matters and proceedings; to qualify residential energy conservation programs permitted under state law for certain federal exemption; to provide for appeals; to provide appropriations; to declare the effect of this act; to prescribe penalties; and to repeal all acts contrary to this act." (Emphasis added.)

The underscored portion above represents new language inserted in the title pertinent to your question.

House Legislative Analysis, HB 6023, July 12, 1978, explains in part the thrust of the new language inserted in the title to 1939 PA 3:

"Currently, the Michigan Public Service Commission (PSC) is empowered to examine and approve energy conservation loan programs implemented by public utilities, if the programs are in accordance with state law. Some such programs which are currently being reviewed by the PSC are in danger of being prohibited by the forthcoming National Energy Act (NEA). The reason for this is that the NEA, when enacted, will prohibit public utilities from spreading the costs of conservation programs by means of charges added to their general rates. Some programs under consideration by the PSC would apply loan interest and administrative costs to the general rate base of the utility, and hence would be prohibited by the NEA. However, the NEA contains certain exemptions from this prohibition. Namely, where such programs were already in effect, were widely publicized or were specifically permitted by state statute prior to the enactment of the NEA, they would be allowed.

"Some persons feel that a full range of low-interest home energy conservation programs should continue to be considered and evaluated by the PSC. In order to retain this option, it is felt that specific legislation should be enacted on the state level permitting the consideration of programs which the NEA would otherwise prohibit."

In an argument advanced against HB 6023, the Analysis stated:

"Some persons feel that the PSC should not be empowered, as it currently is, to approve subsidy of conservation programs by administrative action. It is contended that this should instead be done by statute."

The Legislature amended Act 3, Sec. 6c(6), by means of 1983 PA 80, to provide:

"A utility company maintaining an energy conservation program permitted under this section shall not accept an application for a loan under that program after December 31, 1984. A utility company maintaining an energy conservation program shall not make a loan as a part of that program after June 30, 1985."

Act 3, Sec. 6c(6), was last amended by 1984 PA 378 to substitute "1986" for "1984" in the first sentence and to substitute "1987" for "1985" in the second sentence. As thus amended, the Legislature has barred a utility maintaining an energy loan program from making an energy conservation loan after June 30, 1987. If the application for the loan was received no later than December 31, 1986, the utility could make the loan no later than June 30, 1987. 1984 PA 378 also amended Sec. 6c(1) to confer express authority upon the PSC to approve energy conservation loan programs.

A study of the history of Act 3, Sec. 6c(6), reveals that the authority to approve energy conservation loans to residential customers programs was a limited grant. The power of the Legislature to confer this authority for a limited time only is not open to question.

The fact that a utility is prohibited from making an energy conservation program loan to a residential customer after June 30, 1987 as part of the energy conservation program is no basis to contend that Act 3, Sec. 6c, has been repealed. On the contrary, the authority of the Public Service Commission to approve energy conservation programs continues to be operative. Residential energy audits may continue to be provided by utilities; conservation devices, services, and materials may be made available. After June 30, 1987, the installation of such energy conservation devices, services, and materials may not be made with the proceeds of loans from utilities made after that date.

Since Act 3, Sec. 6c, is otherwise fully operative, Const 1963, art 4, Sec. 24, which requires notice in the title of the repeal, expiration, or nonapplication of a statute on a future date, is not impacted. Letter Opinion of the Attorney General to Governor Blanchard (July 2, 1985); OAG, 1985-1986, No 6310, p 126 (July 29, 1986); and OAG, 1985-1986, No 6402, p 419 (December 1, 1986), which deal with the repeal, expiration or nonapplication of statutes or parts of statutes without notice required by Const 1963, art 4, Sec. 24, do not apply.

While the title to Act 3, as amended by 1978 PA 211, does not expressly state that the PSC was authorized to approve energy conservation programs, the title does speak to the powers and duties of the PSC. When read together with the inserted language dealing with the "energy conservation programs," it is a fair reading of the title that the Legislature was conferring power upon the PSC in the area of energy conservation programs. Thus, the members of the Legislature and the public were put on notice of the contents of 1978 PA 211 in compliance with Const 1963, art 4, Sec. 24. Vernor v Secretary of State, 179 Mich 157; 146 NW 338 (1914); Anderson v Oakland County Clerk, 419 Mich 313, 326; 353 NW2d 448 (1984).

It is my opinion, therefore, that 1939 PA 3, Sec. 6c; MCL 460.6c; MSA 22.13(6c), does not violate Const 1963, art 4, Sec. 24.

Frank J. Kelley

Attorney General

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