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MI Prepares for Second Year of Low-Income Assistance Program

July 18, 2014 — The Michigan Public Service Commission (PSC) just concluded taking public comment on its proposed $0.97 monthly surcharge for the Low Income Energy Assistance Fund (LIEAF). Based on the number of meters provided by participating utilities, statutorily the surcharge cannot be more than $1 per month or generate more than $50 million annually. The proposed charge is $0.02 less than during Fiscal Year 2012-2013.

According to the PSC, more than 20 utilities will collect the surcharge during the upcoming fiscal year. This includes the state's largest electric utilities - Consumers Energy, DTE Energy, and Indiana Michigan Power Company - and some smaller municipals and independently-owned utilities.

The roughly $50 million generated from the LIEAF surcharge will be combined with somewhere between $10 million and $40 million of Michigan LIHEAP funds. Together, these funds form the Michigan Energy Assistance Program (MEAP). The PSC and Michigan Department of Human Services, the LIHEAP grantee, will distribute the MEAP funds through a competitive grant process. MEAP grants support energy-assistance programs for low-income households and provide services to help these households move toward self-sufficiency. Proposals must be submitted by July 29.

This is the second year for LIEAF's funding surcharge. Public Act 95, signed into law in July 2013, charged the PSC with creating a surcharge on electric customers to fund LIEAF. However, it also allowed electric utilities to opt out of collecting the charge. The Act also stated that DHS would distribute LIEAF according to Public Act 615 of 2012. That Act requires 70 percent of the funds to be distributed to low-income households during the "crisis season" of November through May every year.

LIEAF replaced 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.

Between the court ruling and passing Public Act 95, the legislature appropriated public funds for low-income energy assistance on a year-by-year basis. During the 2012 session, Michigan lawmakers successfully created LIEAF. However, a companion bill, which created the funding mechanism, failed. Passage of Public Act 95 in 2013 established the consistent ratepayer funding mechanism for LIEAF.

For more background on LIEAF and MEAP, please see:

Sources: Michigan PSC, LIHEAP Clearinghouse