                           STATE OF MICHIGAN

                           COURT OF APPEALS



In re Application of DTE ELECTRIC COMPANY
to Increase Rates.


RESIDENTIAL CUSTOMER GROUP,                                     UNPUBLISHED
                                                                October 25, 2018
              Appellant,

v                                                               No. 338378
                                                                MPSC
MICHIGAN PUBLIC SERVICE COMMISSION                              LC No. 00-018014
and MICHIGAN CABLE
TELECOMMUNICATIONS ASSOCIATION,

              Appellees,
and

DTE ELECTRIC COMPANY,

              Petitioner-Appellee.


Before: CAVANAGH, P.J., and MARKEY and LETICA, JJ.

PER CURIAM.

       Residential Customer Group (hereinafter “Residential”) appeals as of right the January
31, 2017 order of the Michigan Public Service Commission (MPSC) in Case No. U-18014,
which allowed DTE Electric Company (DTE) to increase its rates, and annual revenues to
increase by approximately $184 million. Specifically, this appeal involves the same challenges
Residential has raised in several prior cases involving DTE and Consumers Energy Company in
regards to the implementation of an Advanced Meter Infrastructure (AMI) and smart meter
program. We affirm.

                                I. STANDARD OF REVIEW

      As this Court explained in In re Application of Consumers Energy Co to Increase Rates,
322 Mich App 480, 486-487; 913 NW2d 406 (2017) (citation and internal caselaw omitted):




                                             -1-
               The standard of review for PSC orders is narrow and well defined.
       Pursuant to MCL 462.25, all rates, fares, charges, classification and joint rates,
       regulations, practices, and services prescribed by the PSC are presumed, prima
       facie, to be lawful and reasonable. A party aggrieved by an order of the [M]PSC
       has the burden of proving by clear and satisfactory evidence that the order is
       unlawful or unreasonable. MCL 462.26(8). To establish that a PSC order is
       unlawful, the appellant must show that the PSC failed to follow a mandatory
       statute or abused its discretion in the exercise of its judgment. An order is
       unreasonable if it is not supported by the evidence.

                A final order of the PSC must be authorized by law and be supported by
       competent, material, and substantial evidence on the whole record. Const 1963,
       art 6, § 28.

               We give due deference to the PSC’s administrative expertise and will not
       substitute our judgment for that of the PSC. We give respectful consideration to
       the [M]PSC’s construction of a statute that the PSC is empowered to execute, and
       this Court will not overrule that construction absent cogent reasons. If the
       language of a statute is vague or obscure, the PSC’s construction serves as an aid
       in determining the legislative intent and will be given weight if it does not conflict
       with the language of the statute or the purpose of the Legislature. However, the
       construction given to a statute by the PSC is not binding on us. Whether the PSC
       exceeded the scope of its authority is a question of law that is reviewed de novo.

“Constitutional claims are . . . reviewed de novo.” Ligon v City of Detroit, 276 Mich App 120,
124; 739 NW2d 900 (2007).

      We also note the following passage of In re Consumers Energy Co App, 322 Mich App at
493-494 because it is pertinent to all of Residential’s arguments in this appeal:

               Ratemaking is a legislative, rather than a judicial, function. For that
       reason, the doctrines of res judicata and collateral estoppel do not apply in a strict
       sense. Nevertheless, factual “issues fully decided in earlier [M]PSC proceedings
       need not be ‘completely relitigated’ in later proceedings unless the party wishing
       to do so establishes by new evidence or a showing of changed circumstances that
       the earlier result is unreasonable.” In re Application of Consumers Energy Co for
       Rate Increase, 291 Mich App 106, 122; 804 NW2d 574 (2010), quoting Pennwalt
       Corp v Pub Serv Comm, 166 Mich App 1, 9; 420 NW2d 156 (1988).

                      II. SMART METERS AND MPSC JURISDICTION

         Residential contends that the MPSC lacks statutory authority to issue orders or approve
tariffs that require the installation of smart meters. Specifically, Residential challenges the
authority of the MPSC to permit DTE to require customers electing to opt out of the smart meter
program to pay surcharges. Residential argues that the MPSC should have required DTE to
consider and implement an opt-in program where customers are given notice and an opportunity
to reject smart meter installation and to avoid costs for the decision to decline the new

                                                -2-
technology. According to Residential, the MPSC improperly relied on rulings from prior
proceedings that are non-binding because they did not comprise contested or formal ratemaking
cases. Having relied on a faulty procedure, Residential asserts that the MPSC erred in
foreclosing the presentation of evidence and argument for the alternative opt-in approach that
Residential advocates.

       Residential’s arguments have previously been rejected by this Court in a published
opinion, and we must follow precedent set by another panel of this Court in cases issued after
November 1, 1991. MCR 7.215(J)(1); Johnson v Heite, 243 Mich App 578, 593; 624 NW2d 738
(2000). Notably, in In re Consumers Energy Co App, 322 Mich App at 489, this Court addressed
Residential’s contention that

       the [M]PSC lacked the authority, absent specific statutory guidance, to mandate
       the installation of smart meters in customers’ homes by approving Consumers’
       smart meter program and its attendant tariffs on an “opt-out” basis. [Residential] .
       . . specifically argue[s] that in prior uncontested cases, the [M]PSC foreclosed the
       presentation of evidence concerning health questions and privacy matters related
       to smart meters and that this defective process prevented the introduction of
       evidence regarding an alternative “opt-in” approach that would have respected
       customer choices and concerns.

         As noted, this Court has previously rejected identical arguments by Residential. Id. at
490-491. We explained that while it is true that no statute specifically allows a utility to require
customers to participate in a smart meter program or to pay surcharges if the customer opts out
of the program, id. at 490, this is because the decision to switch to smart meters “can only be
described as a management prerogative.” Id. Residential’s “suggestion that the [M]PSC could
order [a public utility] to develop an opt-in program is clearly the type of action found invalid in
Union Carbide [v Pub Serv Comm], 431 Mich [135,] 148-150[; 428 NW2d 322 (1988].” In re
Consumers Energy Co App, 322 Mich App at 490. Thus, the suggestion that the MPSC could
direct DTE to use an opt-in program lacks merit. Id. Further, because “approval of the opt-out
fees was a proper exercise of the [M]PSC’s ratemaking authority[]” with respect to another
public utility (i.e., Consumers Energy), id. at 491, the MPSC’s approval of DTE’s opt-out fees
similarly constitutes a proper exercise of its authority. We are bound to follow this Court’s
earlier ruling in In re Consumers Energy Co App, 322 Mich App at 480, as a published decision
of this Court decided after November 1, 1990. MCR 7.215(J)(1). In the absence of any basis to
deviate from this Court’s prior decisions, Residential’s arguments are again rejected.1



1
    While unpublished decisions are not binding, MCR 7.215(C)(1), it is worth noting that
Residential’s arguments have been raised on multiple occasions and uniformly rejected. In a
recent unpublished opinion, this Court rejected the identical arguments made by Residential in
this appeal in regards to DTE’s smart meter program:
               Appellant[] R[esidential] . . . argue[s] that the [M]PSC lacked the
       authority, absent specific statutory guidance, to mandate the installation of smart
       meters in customers’ homes by approving DTE’s AMI program and its attendant


                                                -3-
                               III. CONSTITUTIONAL CLAIMS

        Residential asserts that requiring customers to use smart meters without their consent
raises privacy concerns and is violative of due process. Residential argues that its constitutional
claims cannot be avoided despite DTE’s lacking the status of a state actor because the MPSC’s
approval fulfills the requirement of state action. According to Residential, the overly-intrusive
nature of smart meters facilitates unreasonable searches and seizures and the possible
mishandling of the private consumers’ data. Residential contends, however, that the adoption of
an “opt-in” tariff would alleviate these concerns.

        In In re Consumers Energy Co App, 322 Mich App at 491-493, this Court addressed and
rejected Residential’s argument that “the PSC’s disregard of Consumers’ customers’ concerns
about privacy, data collection, and the transmittal of data violates due-process and Fourth
Amendment principles.” This Court held “that the installation of a smart meter on a customer’s
home does not violate the customer’s rights under the Fourth Amendment of the United States
Constitution because Consumers is not a state actor.” Id. at 491. Because DTE, as did
Consumers, lacks the status of a state actor, we again reject Residential’s arguments on this
issue. Id. at 492-493; MCR 7.215(C)(2) and (J)(1).2

         For the first time on appeal, Residential asserts a claim that the installation of smart
meters is a criminal act in violation of MCL 750.539d, which pertains to the installation of a
recording or transmitting device in a private location without consent. Arguments raised for the
first time in an appellate reply brief are insufficient to present an issue for appeal. Blazer Foods,
Inc v Restaurant Props, Inc, 259 Mich App 241, 252; 673 NW2d 805 (2003). Further, while



       tariffs on an “opt-out” basis. This Court has already fully addressed this issue and
       the accompanying sub-arguments (dealing with alleged constitutional violations
       and alleged “surcharges” on people opting out of the AMI program) in In re
       Application of Consumers Energy Co to Increase Rates, [322 Mich App 480] . . . .
       In re Application of Consumers Energy Co to Increase Rates is binding authority,
       MCR 7.215(J)(1), and mandates rejection of appellants’ arguments in the present
       case. [In re Application of DTE Electric Co to Increase Rates, unpublished per
       curiam opinion of the Court of Appeals, issued February 13, 2018 (Docket Nos.
       331599, 331868, 332159), p 7.]

The same arguments by Residential were also rejected by this Court in In re Application of
Detroit Edison Co to Implement Opt Out Program, unpublished per curiam opinion of the Court
of Appeals, issued February 19, 2015 (Docket Nos. 316728, 31678), pp 5-8.
2
  While unpublished decisions are not binding, MCR 7.215(C)(1), we note that this Court has
rejected essentially identical constitutional claims premised on the same reasoning (i.e., that DTE
is not a governmental actor), in In re Application of Detroit Edison Co to Implement Opt Out
Program, unpub op at 8-9 (Docket Nos. 316728, 316781). See also In re Application of
Consumers Energy Co to Increase Rates, unpublished opinion of the Court of Appeals, issued
October___, 2018 (Docket No. 338592, rejecting Residential’s due process claims.


                                                -4-
Residential claims that smart meters are overly intrusive and capable of discovering exactly
when and how much energy is used by each particular device inside a home, which Residential
posits will permit DTE to monitor an individual’s behavior within his or her residence, it cites no
evidence to support this assertion. Reliance on hypothetical or speculative injuries is insufficient
to establish a constitutionally-based claim of injury. See Mich Ed Ass’n v Superintendent of Pub
Instruction, 272 Mich App 1, 7; 724 NW2d 478 (2006) (“Mere hypothetical or conjectural
injuries do not satisfy the constitutional requirements for standing.”).

                           IV. COST BASIS – OPT-OUT CHARGES

       Residential argues that the MPSC’s orders continuing the opt-out program surcharges are
unlawful and unreasonable because they are improperly reliant on prior MPSC rulings and do not
comply with the substantial evidence test. According to Residential, the imposition of these
surcharges results in duplicative charges on opt-out customers. Further, while DTE failed to
present a qualified witness to substantiate its position that customers opting out of the smart
meter program are causing additional costs to DTE, Residential’s expert testified that the opt-out
customers did not increase DTE’s expenses and that the surcharges could be entirely eliminated
if DTE would permit customers to self-report their monthly electrical usage.

     DTE’s opt-out fees were initially set in MPSC Case No. U-17053. In that case, the
MPSC’s order explained:

               DTE Electric indicated that the proposed $87 initial fee to disable the
       transmitting capability of the meter has three components: (1) $61 for the time
       and expense of disabling the meter, including wage and transportation costs; (2)
       $2 for one hour of training for the employees who will carry out the disabling of
       the meter; and (3) $24 for billing system modifications. The proposed $15
       monthly fee includes the operational costs of the [opt-out program (OP)],
       including costs to manually read the meters. Participants in the OP will receive
       credits of $0.45 and $0.15 per meter for the AMI and meter reading costs included
       in current rates set in Case No. U-16472. . . . The amount of each fee is also based
       on the company’s estimate that 4,000 customers will elect to participate in the OP.
       . . . To arrive at this number, DTE Electric took the 1,100 expressions of
       customer concern that the company has received since the pilot program began
       and divided that number by the 722,000 installations completed as of the date of
       the application, and multiplied the result by the total number of customers
       (2,100,000), to arrive at 3,200, which was rounded up to 4,000. This equates to
       0.2% participation in the OP. . . . DTE Electric indicated that this falls within the
       0.002% to 0.4% range of opt-out participation experienced by utilities in other
       states that are further along in the process. [In re Application of Detroit Edison
       Company to Implement Opt Out Program, order of the Michigan Public Service
       Commission, entered May 15, 2013 (Case No. U-17053), pp 3-4.]

The MPSC Staff agreed with DTE’s “method for calculating the proposed fees based on cost of
service principles, but disagreed with the number of participants.” Id. at 4. The Staff estimated
that 15,500 customers would participate in the program, which would yield “an initial fee of
$67.20, and a monthly fee of $9.80.” Id. By the time the matter reached a decision by the

                                                -5-
administrative law judge, over 3,200 customers had expressed concerns with the program. Id. at
7. This indicated that DTE’s estimate was too low, and as such, the administrative law judge
advocated adoption of the Staff’s recommendation. Id. The MPSC concurred, explaining: “

       While DTE Electric’s method of calculation is conservative (in that it considers
       every expression of concern to result in a decision to opt out), such expressions
       appear to be on the rise as the program expands, and the Staff’s proposed
       participation rate is more credible. Real world experience will help with refining
       this calculation in the future; for the present the Commission . . . adopts the
       Staff’s number . . . .” [Id. at 18.3]

       The amount charged to those opting out of DTE’s smart meter program was also
examined in MPSC Case No. U-17767. In that case, the MPSC’s order states the following
relevant conclusions:

                The Commission agrees with [Residential] that no new formal cost of
       service study (COSS) or other cost support was introduced in this rate case to
       justify the current opt-out program charges. This fact is not disputed. However,
       the Commission also agrees with DTE Electric and the Staff that ample cost
       support was presented regarding the approved charges in Case No. U-17053.
       According to Pennwalt Corp[, 166 Mich App] at 9, the Commission may rely on
       that evidence and the Commission’s previous determinations regarding those
       surcharges in this case in the absence of new evidence of a change in
       circumstances that would necessitate a reconsideration. It is worth noting that
       Case No. U-17053 was a contested case proceeding that met the requirements of
       the Michigan Administrative Procedures Act of 1969, MCL 24.201 et seq. (APA),
       and satisfies due process concerns such as notice and an opportunity to be heard.
       Many utility customers intervened in Case No. U-17053 and [Residential] could
       also have intervened. Further, the fact that the Court of Appeals affirmed the
       Commission’s approval of DTE Electric’s opt-out program and charges further
       assures the Commission that its decision in Case No. U-17053 is supported by
       competent, material, and substantial evidence on the whole record. Here, in the
       absence of new evidence or evidence of a change in circumstances, the
       Commission concludes that the current opt-out charges are appropriate and
       supported by the record evidence supplied in Case No. U-17053. The
       Commission also agrees with the PFD [proposal for decision] and adopts the
       Staff’s proposal recommending a review of the utility’s opt-out charges in either
       its next rate case or six months after the completion of AMI meter installation,


3
  We note that the MPSC’s order was appealed, and this Court affirmed. In re Application of
Detroit Edison Co to Increase Rates, unpublished per curiam opinion of the Court of Appeals,
issued February 19, 2015 (Docket Nos. 316728, 316781). While several challenges were made
in that case, none directly challenged the method of calculating the opt-out fee or the evidence
supporting the calculation.



                                              -6-
       whichever occurs first. [In re Application of DTE Electric Co to Increase Rates,
       order of the Michigan Public Service Commission, December 11, 2015 (Case No.
       U-17767), pp 97-98.]

                                             * * *

               With respect to [Residential’s] claim that the opt-out charges are
       duplicative, the Commission disagrees. [Residential] has failed to present any
       evidence supporting this assertion. Moreover, in Case No. U-17053, the
       Commission approved the current opt-out surcharges which include a credit that
       ensures opt-out customers are not also paying for the AMI program. Because the
       costs associated with opting out and the amount of the credit opt-out customers
       receive to avoid funding the AMI program were already vetted in Case No. U-
       17053, the Commission concludes that this argument lacks merit. Further,
       although [Residential] is correct that no cost support was introduced in this case
       regarding the AMI credits included in the calculation of the current opt-out fees,
       this fact is not dispositive and does not require the Commission to waive or
       reduce the already approved and affirmed AMI opt-out charges. [Id. at 100.]

        In this appeal, Residential again argues that the opt-out charges should be eliminated.
Residential first contends that there was no evidence presented in the current proceeding
supporting the amount of the fees. The reason for this failure is simple: DTE was not seeking to
alter the opt-out fees, which had been set in Case No. U-17053. As the MPSC has explained
before, there is no need for the MPSC to take new evidence on an issue that has been decided
previously, absent a showing that circumstances have somehow changed. In re Consumers
Energy Co App, 322 Mich App at 493-494. See also Pennwalt Corp, 166 Mich App at 9.
Further, Residential is incorrect when it contends that opt-out customers are charged both to opt
out of the smart meter program and for the costs of implementing the smart meter program. As
the MPSC previously explained, opt-out customers are given credits to ensure that they do not
incur duplicative charges for the costs of the smart meter program. In re Application of DTE
Electric Co to Increase Rates, order of the Public Service Commission, entered December 11,
2015 (Case No. U-17767), p 100.

        While In re Consumers Energy Co App, 322 Mich App at 494-496, dealt with
Residential’s challenges to Consumers’ opt-out fees, we note that this Court similarly found it
appropriate for the MPSC to rely on its prior decisions that initially set the opt-out fee where no
relevant changes in the circumstances were shown. The instant matter concerns DTE’s opt-out
fees, but the analysis is essentially the same. Because the reasonableness of the fees were
established in a prior case, there is no need for the MPSC to continually revisit the question
absent any relevant changes in the circumstances. See id.

       Residential’s suggestion that the fees could be eliminated or substantially reduced by
allowing customers to read their own meter’s electrical usage, save for one annual reading each
year by DTE, lacks merit. Residential relies on Commission Rule 114, which is codified as
Mich Admin Code, R 460.114:



                                                -7-
               A utility shall provide residential and nonresidential customers with the
       opportunity to read and report energy usage provided that the customer accurately
       reports energy usage on a regular basis. A utility shall provide postage-paid, pre-
       addressed postcards for this purpose upon request, or the utility may permit
       customers to report meter readings on a secure company website, by telephone, or
       other reasonable means. At least once every 12 months, a utility shall obtain an
       actual meter reading of energy usage to verify the accuracy of readings reported
       in this manner. Notwithstanding the provisions of this rule, a utility company
       representative may read meters on a regular basis. [Emphasis added.]

        Residential contends that DTE should be required to allow opt-out customers to self-read
and report their usage because the rule permits a utility company to allow such a method of
reporting energy consumption. While it would certainly be permissible for DTE to permit opt-
out customers to report their energy usage on a monthly basis, as the MPSC aptly recognized,
DTE nonetheless retains the statutory authority to read the meters on a regular basis.
Residential’s proposal essentially amounts to a request that the MPSC control DTE’s decision
with regard to meter reading in a situation where DTE has been given discretion by the MPSC’s
own rules. The MPSC cannot control or dictate DTE’s management decisions. Union Carbide
Corp, 431 Mich at 148. In addition, the present case is not a rulemaking proceeding. While the
MPSC may have the ability to create rules and regulations “for the conducting of the business of
public utilities,” MCL 460.55, that authority is not implicated in this case, see Union Carbide
Corp, 431 Mich at 152 (distinguishing between the PSC’s authority to act in a rate case as
opposed to a rulemaking proceeding).

         The only change in circumstances that have been demonstrated as implementation of the
smart meter program has progressed is that the number of customers choosing to opt out of the
program is substantially fewer than what the MPSC anticipated when the opt-out fees were
initially determined and set. This change would only lead to an increase in the opt-out rates. But
DTE has not requested a rate increase at this point in time, instead asking the MPSC to delay any
such decision until the program is fully implemented and the number of opt-out customers is
definitively established. The MPSC’s adoption of DTE’s suggested approach was lawful and
reasonable, and thus subject to affirmance.

                              V. RETROACTIVE RATEMAKING

       Residential argues that the MPSC, relying on its earlier decision in Case No. U-17767,
erred when the MPSC rejected Residential’s claim that DTE should not be permitted to recover
expenses arising from income taxes incurred in 2012 because it constitutes retroactive
ratemaking.

        “MCL 460.556 provides the [M]PSC with the power to prescribe uniform methods of
keeping accounts for electric utilities.” Attorney General v Pub Serv Comm, 262 Mich App 649,
651; 686 NW2d 804 (2004). Retroactive ratemaking, however, is not permitted. Id. at 655-656.
“Retroactive ratemaking . . . involves a change either upward or downward in the rates charged
by a utility for its services under a lawful order. . . .” Id. at 657, citing Detroit Edison Co v Pub
Serv Comm, 221 Mich App 370, 375-376; 562 NW2d 224 (1997). Rather, “rates are set in the
commission’s legislative capacity, and therefore must be construed like statutes and only be

                                                -8-
given prospective effect.” Pub Serv Comm, 262 Mich App at 655. As discussed by our Supreme
Court in Detroit Edison Co v Pub Serv Comm, 416 Mich 510, 523; 331 NW2d 159 (1982), “the
essential principle of the rule against retroactive ratemaking is that when the estimates [of costs
on which rates are based] prove inaccurate and costs are higher or lower than predicted, the
previously set rates cannot be changed to correct for the error; the only step that the MPSC can
take is to prospectively revise rates in an effort to set more appropriate ones.” Retroactive
ratemaking does not occur where no adjustments are made to previously set rates, and instead,
“only future rates [are] affected.” Pub Serv Comm, 262 Mich App at 658. When it comes to
ratemaking, deferred expenses are not considered past expenses; rather, once “expenses [are]
deferred, they [become] expenses incurred in the year to which they were deferred.” Id.

      The MPSC has previously approved the accounting methodology4 used by DTE in MPSC
Case No. U-16864 to account for deferred federal and state income taxes, wherein it ordered:

       “Regulated utilities shall apply the Commission’s policy for deferral accounting
       and full normalization ratemaking to the recent state and federal law changes, as
       delineated in the February 8, 1993 order in Case No. U-10083, over a period
       reasonably related to the reversal of the underlying book-tax basis differences.
       [In the matter on the Commission’s Own Motion to Seek Comments for Deferred
       Accounting Treatment for the Remeasurement of Deferred Tax Balances, order of
       the Michigan Public Service Commission, entered February 15, 2012 (Case No.
       U-16864), p 3.]

Similarly, in MPSC Case No. U-10083, the MPSC found the accounting method DTE proposed
to use in the current case to be not only acceptable but also preferable, stating:


4
  This Court also observed in In re Application of DTE Electric Co to Increase Rates,
unpublished per curiam opinion of the Court of Appeals, issued February 13, 2018 (Docket Nos.
331599, 331868, 332159), p 8, with respect to the precise issue raised in this appeal:

               The city of Detroit increased its corporate tax rate from 1% to 2%,
       effective January 1, 2012. DTE’s tax witness testified that the PSC had allowed
       amortization of deferred balances in previous cases, and that DTE was requesting
       similar treatment in this case. The PSC found that the requested treatment did not
       constitute retroactive ratemaking, and noted that DTE’s request was consistent
       with accounting treatment authorized in prior PSC cases.

               We conclude that the PSC’s decision to allow DTE to amortize payments
       associated with the tax did not constitute retroactive ratemaking. By definition,
       retroactive ratemaking occurs when the PSC, absent specific legislative authority,
       changes a rate established in a previous order. [Citations omitted.]

Although the case is unpublished and, therefore, not binding authority on this Court, MCR
7.215(C)(1), we find that the ruling applies to the present appeal.



                                                -9-
               Deferred tax accounting better matches book revenues and expenses to
       their related tax effects. It thus better reflects the financial results of the
       companies’ operations and assigns to the same ratepayers the costs and benefits of
       the items for which deferred tax accounting is used, which promotes
       intergenerational equity. Deferred tax accounting is not harmful to ratepayers. . . .
       [T]he Commission has granted most requests for deferred tax accounting and has
       granted many requests for continuing authority. . . .

                                              * * *

               With respect to generally accepted accounting principles, . . . deferred tax
       accounting is the preferred accounting for taxes, even if the relevant accounting
       standards have permitted an exception for regulatory agencies to require flow-
       through accounting. Deferred tax accounting also promotes rate stability because
       it eliminates distortions due to fluctuations in book/tax-timing differences. [In the
       matter on the Commission’s Own Motion to Examine the Provisions of the
       Uniform Systems of Accounts for Electric and Gas Utilities Related to Deferred
       Income Tax Accounting, Michigan Public Service Commission Order, entered
       February 8, 1993 (Case No. U-10083), p 5.]

        It has been recognized that the amortization of expenditures “becomes a current expense
even though it reflects expenditures that were . . . in the past,” and as such “amortization does not
constitute retroactive ratemaking.” Assoc of Businesses Advocating Tariff Equity (ABATE) v
Public Serv Comm, 208 Mich App 248, 261; 527 NW2d 533 (1994) (citation omitted). Thus, the
deferred taxes pertinent to DTE in this matter are not considered a past expense for purposes of
ratemaking. Because of their deferral, they are treated as a current expense subject to
amortization. Pub Serv Comm, 262 Mich App at 658.

        Residential briefly contends that the MPSC’s decision should be reversed because the
amount DTE seeks to recover for the deferred taxes will be covered by a different line item, one
that takes into account the federal, state, and local taxes DTE expected to incur. Residential
conflates the expense at issue, which is a deferred tax from an earlier year, with taxes that were
anticipated to be incurred for the projected test year. These are different expenses and must be
treated as such.

       We affirm.

                                                              /s/ Mark J. Cavanagh
                                                              /s/ Jane E. Markey
                                                              /s/ Anica Letica




                                                -10-
