States' dereg rights passfirst major court challenge
By Staff -- Purchasing, 2/12/1998
Power-market restructuring advocates are hailing a late-January Michigan Appeals Court decision as a "victory" for industrial buyers of electric power.The case involved a challenge to a Michigan state experimental retail wheeling program that would allow industrial and other customers to buy power either out of state or from new power sources within the state. Two investor-owned Michigan utilities--Detroit Edison and Consumers Power--had brought the suit against the Michigan Public Service Commission (PSC), claiming that the PSC had no authority to implement the program under state law.
The Appeals Court rejected the utilities' arguments that the PSC had no authority and that compelling them to carry power from outside sources over their lines to their existing customers would relieve them of obligations to serve those customers.
"This is the first major court challenge to restructuring of the industry to be decided," says John Hughes of the Electricity Consumers Resource Council (elcon), which represents large industrial power buyers and which joined the Chemical Manufacturers Association and other industry associations in filing an amicus brief in the case.
"Over a dozen states have now approved the concept of giving customers the right to choose from whom they buy their electricity," says elcon's executive director John Anderson. "One of the most bogus legal arguments has been that states do not have the legal authority to order competition. I hope, that, in light of this decision by the Michigan Court, utilities in other states such as New Hampshire will stop trying to deny customers the benefits of competition through the filing of spurious lawsuits."
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