A small monthly surcharge on most Michigan power bills will rise in 2025. Here’s why

Michiganders reading the fine print on their power bills will see a small monthly surcharge tick up slightly beginning later in 2025.

Starting in September, the charge, known as the low-income energy assistance funding factor, will rise from 87 cents to $1.25 monthly.

The per meter fee, limited to one per household, flows to a state aid program for low-income households struggling to stay up to date on utility bills.

A change in state law in 2024 significantly widened the swath of people who qualify for the assistance and gave utility regulators the green light to increase the surcharge as well. Previously, it was limited to a maximum of $1 a month.

Read more: Whitmer signs bills ramping up aid for Michiganders who fall behind on utility bills

The Michigan Public Service Commission, which oversees utilities, approved the change on April 24.

It’s expected to generate more than $75 million for energy assistance over the course of the year, according to the commission’s Chair Dan Scripps.

Previously, the money collected for state aid, called the Michigan Energy Assistance Program, or MEAP, was capped at $50 million annually. “This is a significant step forward in terms of the dollars that will be available,” Scripps said.

The program connects households with aid, puts them on affordable payment plans and provides financial counseling to keep them caught up with heating and electric bills.

Since the COVID-19 pandemic, nonprofits that help run the program have reported soaring demand, and the money has run out earlier and earlier each year.

The bipartisan state legislation to expand the pot of money available by allowing the bill surcharge to increase advanced in late 2024. Gov. Gretchen Whitmer then signed the law in December.

It may now rise another 25 cents each year until it reaches a new maximum of $2, then adjusted for inflation going forward — more than doubling the money available for utility aid.

The changes in the law also increase the income limits for the program, potentially opening it up to an additional 335,000 households. In the past, it has served roughly 50,000 a year.

The law requires the money collected by the state from utilities via the surcharge to be returned to low-income customers in the geographic area where it is collected, to the greatest extent possible.

The expansion comes as a separate federal assistance program for home energy costs helping more than 400,000 Michigan households faces a cloudy future.

President Donald Trump’s administration proposes to gut the federal Low Income Home Energy Assistance Program, following the firing of all the staffers who run it, The Washington Post reported. This fiscal year, Michigan got roughly $165 million from the program.

Spokespeople with the Michigan Department of Health and Human Services, which administers the funding when it reaches the state, did not respond to three emailed requests for comment dating back to April 7 about the impact of the turmoil surrounding the federal aid program.

Officials coordinate the federal assistance with state aid programs, like the one funded through the power bill surcharge.

The vast majority of Michigan power customers pay the charge. It’s collected by a wide variety of power providers, from electric cooperatives to city utilities and big, for-profit power companies across the state. A handful opt out, but they must establish their own utility aid program.

The charge on power bills is set to remain at $1.25 between September 2025 and August 2026. It’s set annually by the Public Service Commission.