Rising energy bills have been getting increasing attention as an urgent economic issue, and high energy costs hit low-income customers the hardest, threatening their economic security and even their health. A new report from the Citizens Utility Board (CUB) of Michigan comprehensively examines the situation facing low-income utility customers in Michigan and provides a set of recommendations for regulators, legislators and utilities on ways to improve outcomes and ease the burden on this group.
The report, Power Struggle: Energy Insecurity in Michigan’s Low-Income Communities, explains how low-income households in Michigan are forced to make difficult choices between their utility bills on one hand and other essentials like medicine and food on the other. Their energy burden – how much of their income is taken up by energy costs – is high, and correlates with health and environmental risk factors.
“Despite the risks posed by high energy burdens, Michigan energy regulations do not prioritize the unique needs of low-income customers the way they could and should,” CUB Executive Director Amy Bandyk said. “From utility disconnection practices to customer access to rooftop solar to electrification and a host of other issues, on a number of topics this report points to reforms that can help low-income families.”
For example, each time a Michigan utility increases its rates, the energy burden problem grows worse, yet there is no requirement that the impact on low-income customers be assessed before rates go up. Among the report’s recommendations is that the legislature extend the amount of time a utility must wait between rate-case filings to at least 24 months, a change that would end the “revolving door” of annual rate cases that is jacking up customer bills.
The recommendations in the report include:
- The Michigan Public Service Commission (MPSC) staff should be required to provide an analysis of any proposed rate increase’s effect on energy burden for low-income customers.
- The MPSC should adopt an outage credit of at least $2 per hour for residential customers
- The MPSC should require utilities to offer Percentage of Income Payment Plans (PIPPs) where payment is limited to a proportion of household income for low-income customers, using a 6% percentage-of-income target for combination customers and 4% for gas- or electric-only customers
- Utilities and other assistance providers should automatically enroll customers into bill payment assistance programs based on categorical eligibility (i.e., participation in food, housing, or other assistance programs) or known qualifying data to streamline the process so that low-income customers can get assistance faster, with less effort and more reliably
- The MPSC, state agencies, utilities, and home energy contractors should collaborate to develop outreach, education, and assessment programs to encourage low-income homeowners to switch from propane to electric space and water heating prior to equipment failure
CUB of Michigan was formed in 2018 to represent the interests of residential energy customers across the state of Michigan. CUB educates and engages Michigan consumers in support of cost-effective investment in energy efficiency and renewable energy and against unfair rate increase requests.