Legal Reference Blog by Renee C. Walsh, Attorney

29/08: Public Utilities and Consumer Rights - Michigan

Did you know that Consumers Energy can transfer a debt from another consumer's account to yours or your client's and if payment is not made, a shut off notice will follow? What should you do you do in this situation?

The public utilities are governed by several different laws in respect to this situation. Where a debt is being collected, the Federal and Michigan Fair Debt Collection Practices Acts apply specifically. There are also Michigan Compiled Laws and Public Service Commission Rules (formally known as Michigan Department of Consumer and Industry Services Public Service Commission Consumer Standards and Billing Practices for Electric and Gas Residential Service Rules (Public Service Commission Rules) which apply to public utilities applying residential services, and these are the reason for this discussion.

Chapter 460 of the Michigan Compiled Laws applies. According to MCL 460.557, the Public Service Commission promulgates rules for the conduct of the service providers and any person dealing with the Commission or interested in a matter or proceeding pending before the Commission is bound by those rules. The law requires that all written complaints be investigated, noticed and allowed for hearing. Administratively, if a client / customer has a dispute with a utility company, the Public Service Commission Rules 460.2101 et seq. apply. There are rules for billing, requiring deposits, processing complaints, debt collection and shut off of service. Some noteworthy rules are those setting forth prohibited practices. As a practical matter, a consumer might have the experience to have another person's debt transferred to their bill. Rule 460.2133 applies and prohibits any attempt to recover from any person any outstanding bills or other charges due upon the account of any other person, unless that other person has entered into a lawful guarantee or other agreement to pay those bills and charges. Also, Rule 460.2161 which provides for permitted shut off of service is noteworthy.

Under subsection (h), if a current member of the customer's household has not paid a delinquent account for service that is not in dispute and that is owed by that person, shut off is permitted if the customer lived at the same residence served by the utility at the time that all or part of the debt was incurred by the current member of the customer's household. This would apply in a situation where, for example, adult siblings lived together and received service as to which the account went delinquent, and then later moved to a new residence and put the service account in the non-delinquent account holder's name to avoid payment. Shut off would be prohibited if the landlord were required to pay for the service under the lease under Rule 460.2162; and under Rule 460.2153, a shut off can be prevented for up to 63 days in the event of a medical emergency if the consumer can produce a physician's certificate of necessity.

If a customer disputes a bill, the shut off must not occur until the dispute is resolved. The utility company must offer the customer the opportunity for a hearing, which is a hearing by a hearing officer with the opportunity to be represented by counsel, present evidence and examine witnesses. Settlements can be entered as in any other lawsuit, and if subsequently defaulted, then shut off can occur. Appeal from an unfavorable decision is to the Public Service Commission and there are procedures for both a formal appeal and informal appeal.