DEPARTMENT OF ENERGY, LABOR, AND ECONOMIC GROWTH  
PUBLIC SERVICE COMMISSION  
MERGERS AND ACQUISITIONS  
(By authority conferred on the public service commission by section 6q of 2008  
PA 286, MCL 460.6q.)  
R 460.301 Scope.  
Rule 1. (1) The prior approval of the commission is required when any of the  
following occurs:  
(a) A person acquires or merges with a jurisdictional regulated utility.  
(b) A transaction involves the transfer of control of a jurisdictional regulated  
utility.  
(c) A jurisdictional regulated utility sells, assigns, transfers, or encumbers  
assets to another person, except if such sale, assignment, transfer, or encumbrance of  
assets occurs in the normal course of business.  
(2) The prior approval of the commission is not required for the issuance of  
securities or other financing transactions that are not directly or indirectly involved in  
an acquisition, merger, encumbrance, or transfer of control.  
History: 2011 AACS.  
R 460.302 Definitions.  
Rule 2. As used in these rules:  
(a) "Acquire" or "acquisition" means to obtain an interest in a jurisdictional  
regulated utility through a transaction that results in a transfer of control of the  
jurisdictional regulated utility. An underwriter or broker-dealer that obtains an interest  
in securities solely for the purpose of facilitating a distribution of securities does not  
thereby acquire or make an acquisition of an interest in the jurisdictional regulated utility  
for purposes of MCL 460.6q and these rules.  
(b) "Applicant" means any person seeking approval from the commission under  
MCL 460.6q and these rules.  
(c) "Asset" means real and personal property, including natural gas and electric  
distribution facilities, electric transmission and generation facilities, and natural gas  
transmission and storage facilities, owned by a jurisdictional regulated utility and used  
to directly provide natural gas or electric utility services to end users at rates regulated by  
the commission. For purposes of these standards, asset does not include accounts  
receivable.  
(d) "Assign" or "assignment" means the transfer to another person of any of the  
interest held in an asset or assets.  
(e) "Encumber" or "encumbrance" or "encumber assets" means subjecting an asset  
or assets of a jurisdictional regulated utility to a lien or security interest for purposes  
other than to facilitate, directly or indirectly, financing of utility operations, or for  
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purposes other than to facilitate, directly or indirectly, the provision of utility  
service. It does not include a refinancing of existing secured debts or securities to  
the extent that the amount refinanced is equal to or less than the amount of the  
existing secured debt or security.  
(f) "Jurisdictional regulated utility" means a utility whose rates are regulated by  
the  
commission.  
Jurisdictional  
regulated  
utility  
does  
not include  
a
telecommunications provider as defined in the Michigan telecommunications act,  
1991 PA 179, MCL 484.2101 to 484.2604, or a motor carrier as defined in the motor  
carrier act, 1933 PA 254, MCL 475.1 to 479.43.  
(g) "Merge" or "merger" means the combination or consolidation of a  
jurisdictional regulated utility with another person in a manner that results in a transfer of  
control of the jurisdictional regulated utility.  
(h) "Original book cost" means the amount at which an asset is recorded in the  
books of accounts of the jurisdictional regulated utility, plus additions, without  
deduction of related provisions for accrued depreciation,  
amortization, securitization, write-downs, impairments, or for other purposes.  
(i) "Person" means an individual, corporation, association, partnership, utility, or  
any other private or public entity. Person includes a jurisdictional regulated utility.  
(j) "Normal course of business" means a transaction that is related to the transfer,  
sale, assignment, or encumbrance of assets and that satisfies any 1 of the following  
criteria:  
(i) With respect to utilities having 500,000 or more retail customers, a transaction  
that involves the transfer, sale, or assignment of assets having an original book cost  
equal to or less than the dollar threshold identified in the following table:  
Transaction Date  
Prior to December 31, 2020  
Dollar Threshold  
$50 million  
January 1, 2021 to December 31, 2030  
January 1, 2031 to December 31, 2040  
January 1, 2041 to December 31, 2050  
January 1, 2051 to December 31, 2060  
January 1, 2061 to December 31, 2070  
January 1, 2071 to December 31, 2080  
January 1, 2081 and beyond  
$65 million  
$85 million  
$105 million  
$135 million  
$175 million  
$225 million  
$275 million  
(ii) With respect to utilities having fewer than 500,000 retail customers, a  
transaction that involves the transfer, sale, or assignment of assets having an original  
book cost equal to or less than the dollar threshold identified in the following table:  
Transaction Date  
Prior to December 31, 2020  
Dollar Threshold  
$10 million  
January 1, 2021 to December 31, 2030  
January 1, 2031 to December 31, 2040  
January 1, 2041 to December 31, 2050  
January 1, 2051 to December 31, 2060  
$12.8 million  
$16.4 million  
$21 million  
$26.9 million  
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January 1, 2061 to December 31, 2070  
January 1, 2071 to December 31, 2080  
January 1, 2081 and beyond  
$34.4 million  
$44 million  
$56.3 million  
(iii) With respect to all utilities, a transaction, regardless of amount, that constitutes  
a sale, assignment, transfer, or encumbrance of interests in fuel, natural gas, purchased  
power, electric or natural gas transmission capacity, natural gas storage services, or  
other commodities, if such transaction is otherwise subject to review for reasonableness  
and prudence in a gas cost recovery or power supply cost recovery proceeding, or a  
successor thereof.  
(iv) With respect to cooperative utilities whose rates are regulated by the  
commission, an encumbrance of assets in which the total aggregate proceeds to the  
jurisdictional regulated utility from all of the currently outstanding encumbrances  
immediately following the encumbrance will not exceed 5 million dollars.  
A transaction described in subdivision (j) (i), (ii), (iii), or (iv) of this rule shall not be  
classified as in the normal course of business if the transaction, either directly or  
indirectly, is in connection with the acquisition, transfer of control, or merger of a  
jurisdictional regulated utility, or if the transaction involves the transfer or sale of an  
electrical generating plant that has a total installed generating capacity (nameplate  
rating) of more than 20 megawatts.  
(k) "Sell assets" means the transfer to another person of any of the interest in an  
asset or assets.  
(l) "Transaction" means an acquisition, merger, transfer of control, sale, assignment,  
transfer, or encumbrance as provided in R 460.301.  
(m) "Transaction date," for purposes of the tables found in subdivision (j) (i) and (ii)  
of this rule only, means the date on which a jurisdictional regulated utility and another  
party to the transaction execute a final agreement for the transfer, sale, or  
assignment of an asset of the jurisdictional regulated utility.  
(n) "Transfer assets" means the sale or assignment to another person of any of the  
interest in an asset or assets. It does not include the transfer of pension plan or other  
retirement assets done to facilitate a change in the management of such assets.  
(o) "Transfer of control" means the transfer to another person of the power to direct  
or cause the direction of the management and policies of a jurisdictional regulated  
utility, whether through the ownership of voting interests or voting securities, by  
contract including acquisition of assets, or otherwise. Transfer of control is presumed to  
occur under either of the following conditions:  
(i) After the transfer, the transferee, by formal or informal arrangement, device, or  
understanding, directly or indirectly, owns, controls, holds with the right to vote, or  
holds proxies representing 50% or more of the outstanding voting interests or voting  
securities that are entitled to elect a majority of the board of directors or other  
governing body of the jurisdictional regulated utility.  
(ii) After the transfer, the transferee, by formal or informal arrangement, device, or  
understanding, directly or indirectly, owns, controls, holds with the right to vote, or  
holds proxies representing 20% or more of the outstanding voting interests or voting  
securities that are entitled to elect a majority of the board of directors or other  
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governing body of the jurisdictional regulated utility, if such transferee is, after  
the transfer, the largest holder of such voting interests. The presumption of a transfer of  
control described in subdivision (o) (i) and (ii) of this rule may be rebutted.  
History: 2011 AACS.  
R 460.303 Application for approval.  
Rule 3. (1) Applications for commission approval filed under MCL 460.6q shall  
contain pre-filed testimony addressing the requirements of MCL 460.6q(3) and  
MCL 460.6q(7), and shall include all of the following information for each applicant  
and each jurisdictional utility whose assets or securities are involved in the proposed  
transaction:  
(a) The exact name of the applicant(s) and principal business address(es).  
(b) The name and address of the person authorized to receive notices and  
communications regarding the application, including phone and fax numbers, and the e-  
mail address.  
(c) A description of the applicant, including all business activities and jurisdictional  
real and personal property owned, operated, or controlled by the applicant and its parent  
companies.  
(d) Organizational charts depicting the applicant's current and proposed post-  
transaction corporate structures.  
(e) A description of the proposed transaction including the identity of all the  
parties involved, the terms and conditions of the transaction, and a detailed explanation  
of the reasons for entering into the transaction.  
(f) A detailed description of the projected impact of the transaction on customer  
rates and electric and/or gas service.  
(g) All documents related to the proposed transaction together with copies of all  
other written instruments entered into or proposed to be entered into by the parties to the  
transaction.  
(h) A statement explaining the facts relied upon to demonstrate that the proposed  
transaction is consistent with the public interest. The applicant shall include a general  
explanation of the effect of the transaction on competition and rates. The applicant  
may also file any other information it believes relevant to the commission's  
consideration of the transaction.  
(i) Pro forma financial statements resulting from the transaction.  
(j) Copies of the parties' public filings with other state or federal regulatory  
agencies regarding the same transaction, including any regulatory orders issued by those  
agencies regarding the transaction.  
(k) Proposed accounting entries showing the effect of the transaction with sufficient  
detail to indicate the effects on all account balances, on the income statement, and on  
other relevant financial statements. The applicant shall explain how the amount of each  
entry was determined.  
(l) A description of the capital structure of all parties to the transaction prior  
to the closing of the transaction, including all of the following:  
(i) The amounts and types of equity.  
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(ii) The terms of preference stock, whether cumulative or participating, or on  
dividends or assets, or otherwise.  
(iii) The amount of bonds authorized and issued, describing each class separately  
and giving the date of issue, par value, rate of interest, date of maturity, and how secured.  
(iv) Other indebtedness, if any.  
(m) A description of the capital structure of all parties to the transaction after  
the closing of the transaction, including any new entities created as a result of the  
transaction, including the following:  
(i) The amounts and types of equity.  
(ii) The terms of preference stock, whether cumulative or participating, or on  
dividends or assets, or otherwise.  
(iii) The amount of bonds authorized and issued, describing each class separately  
and giving the date of issue, par value, rate of interest, date of maturity, and how secured.  
(iv) Other indebtedness, if any.  
(n) A description of the applicant's commitment, if any, to maintaining existing  
levels of corporate charitable contributions and community support after the transaction.  
(o) A description of the effect of the transaction on the degree of risk assumed by  
utility customers for liabilities associated with activities that are not regulated by the  
commission.  
(p) A description of the applicant's commitment, if any, to maintaining existing  
corporate offices located in Michigan.  
(q) An explanation of whether the applicant or any party to the transaction  
intends to seek rate recovery of transaction costs, acquisition premiums, goodwill, or  
control premiums, and the projected amount.  
(r) A detailed description of the effect of the transaction on the affected  
utility's regulatory cost of capital.  
(s) A description of transaction related savings credits for customers, if any.  
(t) A description of the effect of the proposed transaction on market power.  
(u) A description of the effect of the proposed transaction on the affected  
utility's state and local tax liability.  
(v) A description of any projected labor force reduction associated with the  
transaction.  
(w) A description of any proposed safeguards for stabilizing wages and benefits  
associated with the transaction.  
(x) A description of any additional commitments the applicant is making to the  
commission that are not included in the transaction documents.  
(y) A description of any new entities created to facilitate the transaction.  
(z) Applicants, and each jurisdictional utility whose assets or securities are involved  
in the proposed transaction, shall not rely upon any models or data subject to proprietary  
constraints for their applications filed under MCL 460.6q, unless the applicant or utility  
provides, upon request of any party, a mutually agreed upon time and place for the  
party's inspection of the proprietary model or data, along with operating manuals  
necessary to allow the inspecting party to use the model or data. For purposes of this  
subdivision, "party" includes, but is not limited to, any person who has filed a petition  
to intervene in the proceeding to which no objection has been filed.  
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(2) On the date that the application is filed, the applicant shall serve a copy of the  
application on the attorney general and on all parties to the applicant's or the affected  
utility's most recently completed general rate case. The application shall include a  
notice informing the public of the opportunity to comment on the application. The  
applicant shall publish the notice in 3 newspapers of general circulation in the  
applicant's service territory, or in the service territory of the affected utility if the utility  
is not the applicant, not later than 7 days from the date of filing the application.  
The notice shall provide that comments are due within 60 days of the date the  
application was filed.  
(3) After notice and hearing and within 180 days from the date an application  
is filed under this rule, the commission shall issue an order approving or rejecting the  
proposed transaction. In the absence of a showing of good cause, determined by the  
executive secretary or the presiding officer on a case-by-case basis, for more exigent  
treatment, milestones for filings during the 180-day period are as follows:  
(a) The executive secretary and the presiding officer shall endeavor to schedule  
the initial prehearing conference not later than 24 calendar days after the filing of an  
application for approval under MCL 460.6q. Failure to comply with this subdivision  
shall not be a basis for any party to appeal to the commission.  
(b) At the initial prehearing conference the presiding officer shall establish a  
schedule that will allow the commission to issue a final order within 180 days of the  
filing of an application. The schedule established by the presiding officer may be  
amended by the presiding officer or the  
commission as provided by law. Both of the following apply:  
(i) At the initial prehearing conference the presiding officer shall establish a  
schedule that will allow the commission to issue a final order within 180 days of the  
filing of an application. The schedule established by the presiding officer may be  
amended by the presiding officer or the commission as provided by law.  
(ii) Discovery shall, as far as practicable, be conducted in the same manner as in  
the circuit courts of this state under the Michigan court rules or as otherwise provided by  
law. The party on whom interrogatories, requests for production of documents and other  
things, and requests for admission is served shall serve the answers and objections, if  
any, on all other parties within 5 business days after the discovery is served. When  
appropriate, the presiding officer may set different time limitations for the conduct of  
discovery. For purposes of this subdivision, "party" includes the applicant, a person who  
has filed a petition to intervene to which no objection has been filed, a person who is  
permitted to intervene, and the staff of the commission.  
(c) In establishing a schedule under subrule (3) (b) of this rule, the presiding  
officer shall attempt the following calendar day milestones:  
(i) Direct testimony by the commission staff and intervenors filed within 50  
calendar days following the initial prehearing conference.  
(ii) Rebuttal testimony filed within 10 calendar days after the filing of direct  
testimony by the commission staff and intervenors.  
(iii) Cross-examination beginning not later than 7 calendar days after the filing of  
rebuttal testimony and concluding not later than 14 calendar days after the filing of  
rebuttal testimony.  
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(iv) Initial post-hearing briefs filed within 14 calendar days following the  
originally scheduled date for conclusion of cross-examination.  
(v) Reply briefs filed within 10 calendar days after the filing of the initial post-  
hearing briefs.  
(vi) Proposal for decision issued approximately 24 calendar days after the filing of  
the reply briefs.  
(vii) Exceptions filed within 7 calendar days after the issuance of the proposal for  
decision.  
(viii) Replies to exceptions filed within 5 calendar days after the filing of  
exceptions.  
(ix) Commission's final order issued approximately 22 calendar days after the filing  
of the replies to exceptions.  
History: 2011 AACS.  
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