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MI PSC Sets Surcharge for Low-Income Rate Assistance

August 2, 2013 — This week the Michigan Public Service Commission (PSC) adopted a surcharge for participating electric utilities to fund the Low Income Energy Assistance Fund (LIEAF). The $0.99 monthly charge will be effective for the September billing cycle. The PSC reports that over 20 utilities have filed notice that they intend to participate.

Public Act 95 charged the PSC with approving a non-bypassable surcharge on electric customers, including those served by cooperatives and municipals, to fund LIEAF. However, it also allowed these utilities to opt out of collecting the surcharge.

Public Act 95 stated the surcharge could not be more than $1.00 per month, and it capped the amount that can be raised annually for LIEAF at $50 million. The Department of Human Services will distribute LIEAF according to Public Act 615 of 2012. That Act states that 70 percent of the fund must be distributed to households with incomes at or below 150 percent of federal poverty guidelines during the "crisis season" of November through May every year.

The PSC announced in mid-July that it was proposing the monthly surcharge to be $0.91 per month. In its final order, the PSC decided on $0.99 per month based on data submitted by the utilities. The commission stated the utilities showed a total of 4,225,654 electric meters. With the funding target being $50 million, the PSC settled on the $0.99 figure.

LIEAF replaces a previous ratepayer-funded program the Michigan Court of Appeals struck down in 2011. Started in 2002, the Low-Income Energy Efficiency Fund provided energy assistance and energy efficiency to low-income customers. From 2002 through 2010, the PSC distributed about $664 million in grants from the fund, 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 efficiency fund and in approving utilities to collect ratepayer money for it. Until the passage of Public Act 95, the legislature had appropriated public funds for low-income energy assistance on a year-by-year basis since the ruling. For more background, please see this article on the Clearinghouse website.

During the 2012 session, Michigan lawmakers successfully created LIEAF. However, a companion bill, SB 1134, which would have created the funding mechanism, failed. The legislature ended up appropriating about $60 million in public money to provide energy assistance for Fiscal Year 2013. This week's order adopting the amount of the monthly surcharge finally establishes a consistent ratepayer funding mechanism for LIEAF.

Sources: Michigan Public Service Commission, Michigan Legislature, LIHEAP Clearinghouse