Low-Income and Energy Efficiency Fund (LIEEF)

Summary

The Low-Income and Energy Efficiency Fund (LIEEF), a statewide public benefits fund, is administered by the Michigan Public Service Commission (MPSC). Michigan's largest utilities, Detroit Edison, Consumers Energy, and Michigan Consolidated Gas Company (MichCon), contribute to the fund with money obtained through customer charges. Using LIEEF funding, the MPSC issues periodic requests for proposals (RFPs) for prospective projects. The purpose of the LIEEF is to provide energy assistance for low-income customers, to provide conservation and efficiency measures to reduce energy use and energy bills of low-income customers, and to promote energy efficiency among all customer classes. Yet, the MPSC emphasizes that the fund does not provide direct funding to homeowners or renters. Interested applicants should review currently available requests for proposals to ensure they qualify before contacting the PSC for additional information. SB 438, approved in December 2016, carried forward the state’s 1% annual energy savings requirement for utilities. The ACEE provides more information on this program in Michigan and other states.

RFP Solicitations

In a November 2001 order that established the procedural framework for the LIEEF, the MPSC decided that 75% of monies awarded will support grants for energy efficiency projects and energy assistance for low-income residents, and the remaining 25% will support grants for energy efficiency projects to benefit all customer classes. Thereafter, the MPSC began distributing LIEEF awards in February 2002.

According to the October 2011 LIEEF Report, $81 million was allocated to energy efficiency grants (including renewables) in the 2011 fiscal year. Note that some renewable energy projects, including wind turbines, photovoltaic (PV) systems, anaerobic digesters and other biomass projects, have received funding from the LIEEF under the energy efficiency project designation. 

History

The LIEEF is authorized by the state's energy restructuring legislation (Act 141), enacted in June 2000.* Yet, the original source of funding for the LIEEF resulted from securitization savings that exceeded the amount needed to achieve a 5% electric-rate discount for residential and business customers. Detroit Edison was the only electric utility with securitization savings that exceeded the amount necessary to fund the required rate reduction under Michigan's restructuring legislation. Detroit Edison remitted approximately $45 million annually to the LIEEF until the MPSC determined in February 2004 that there were no longer any excess securitization savings to support the fund. As a result, the MPSC established a surcharge on Detroit Edison's distribution rates; this surcharge generates $39.9 million annually. In addition, in a rate-case settlement with Consumers Energy in December 2005, the MPSC directed the utility to contribute $26.5 million annually to the LIEEF from its electricity customer base. Further MPSC ratemaking action in November 2006 directed Consumers Energy to contribute an additional $17.4 million annually from its natural gas business. Most recently, 2010 MPSC ratemaking action directed Michigan Consolidated Gas Company (MichCon) to contribute $5 million annually to the LIEEF. Total annual funding now amounts to roughly $89 million.

*The language relating to utility funding of the LIEEF was originally contained in MCL §460.10d. This section no longer applies and has been removed from the code, but the LIEEF continues to receive funding from Detroit Edison and Consumers Energy through PSC rate-case settlements.