MI Creates New Energy Assistance Program

January 29, 2013 -- The Michigan legislature has created a new program to address the state's lack of supplemental energy assistance funding.

On January 8, Governor Rick Snyder signed into law SB 1135 creating the Michigan Energy Assistance Program that will be administered by the Department of Human Services (DHS). While DHS, the LIHEAP grantee, continues working to establish and implement the new program, questions about its future funding remain.

The program is an outgrowth of the 2011 demise of the Low-Income and Energy Efficiency Fund (LIEEF). Starting in 2002 and funded through ratepayer surcharges, the LIEEF provided shutoff and other protections for low-income customers and promoted energy efficiency by all customers. From 2002 through 2010, the Michigan Public Service Commission (PSC) solicited grant proposals and allocated LIEE funds statewide, including significant portions to the DHS, the Michigan Community Action Agency Association, and THAW, the statewide fuel fund to operate their respective assistance programs. During that time, the PSC gave out $664 million in grants, with over $452 million of that targeted to low-income energy assistance.

In 2011, the Michigan Court of Appeals ruled the PSC was acting outside its statutory powers both in administering the LIEEF and in approving utilities collecting funds from ratepayers for it. The court's decision forced the PSC to cancel over $60 million in grants that had been directed to low-income energy assistance.

The Michigan legislature responded to the court ruling by creating the "Vulnerable Household Warmth Fund" to help low-income households pay their energy bills. The act gave one-time appropriations to both the PSC and DHS for emergency energy assistance. The fund only existed for the 2011-2012 heating season, which meant the legislature had to revisit the issue in order to provide funding for the current year.

SB1135 served as the vehicle to replace the LIEEF with the Michigan Energy Assistance Program. The program will provide energy assistance to low-income households that have incomes of not more than 150 percent of federal poverty guidelines. Services will include helping these households pay their gas and electric bills, in addition to helping recipients optimize energy efficiency. The program must use 70 percent of its funds during the "crisis season," defined as November 1 through May 31.

In recent news articles, Governor Snyder and legislative supporters described their vision of the program as a new and different approach to crisis assistance, including more focus on crisis prevention. They noted that LIHEAP and LIEE-funded assistance focus primarily on serving households after they already have a utility shutoff, which they termed inefficient.

A companion bill, SB 1134, would have created a funding mechanism for the program through an annual surcharge on all electric customers' bills. While SB 1135 passed, the funding bill failed. As a result, the legislature made two one-time appropriations totaling approximately $60 million to provide energy assistance for fiscal year 2013. The money came from two sources, TANF and the state general fund. The $27.7 million from the general fund made its way to the PSC via an agreement with DHS that the funds be used to aid low-income households. The PSC granted the money to nine organizations, a majority of which had received similar funding from the LIEEF. The $32.2 million in TANF funding will be spent through DHS' LIHEAP crisis assistance component, which is called State Emergency Relief.

The legislature continues to search for a permanent funding stream for the Michigan Energy Assistance Program, whether through utility ratepayers or some other funding source.

Sources: Michigan legislature, Michigan Public Service Commission, Michigan Department Of Human Services, newspapers