The Customer Choice and Electricity Reliability Act of 2000, 2000 PA 141 (Act 141), authorized the creation of a Low-Income and Energy Efficiency Fund, administered by the Michigan Public Service Commission via grants to qualifying organizations. The purpose of the fund is to provide shut-off and other protection for low-income customers and to promote energy efficiency by all customer classes.

The fund results from securitization savings that exceeded the amount needed to achieve a 5% electric rate reduction for residential and business customers. Section 10d(6), MCL46010d(6) of Act 141 specifies the use of a portion of the savings:

If securitization savings exceed the amount needed to achieve a 5% rate reduction for all customers, then, for a period of 6 years, 100% of the excess savings, up to 2% of the electric utility's commercial and industrial revenues, shall be allocated to the low-income and energy efficiency fund administered by the commission. The commission shall establish standards for the use of the fund to provide shut-off and other protection for low-income customers and to promote energy efficiency by all customer classes.

The Detroit Edison Company is the only electric utility whose securitization savings exceed the amount necessary to fund the rate reduction required in the Act and is the only company contributing to the Fund. On July 25, 2002, Governor John Engler signed the Department of Consumer and Industry Services appropriations bill for 2002- 2003, Public Act 527 of 2002, which authorized $57 million for the Fund and required that the Commission report by June 1, 2003, on the distribution of funds. The $57 million appropriation reflects an estimate of the annual revenues that could accrue to the Fund. Actual remittance, which occurs monthly, totals approximately $3.6 million per month or about $44-46 million annually. As of May 3, 2003, Detroit Edison had remitted $87,357,848 to the Department of Consumer and Industry Services.

Procedural Framework

In its November 20, 2001 Order, the Commission set the procedural framework to administer the Fund. Based on Act 141, the Commission stated it expected the annual disbursement for each of the six program years to fall into three broad categories:

1. Energy assistance for low-income customers;
2. Conservation and energy efficiency measures targeted toward reducing the energy use and energy bills of low-income customers; and
3. The development of energy efficiency programs that benefit all customer classes.