How government shutdown could add to strain on Michigan ratepayers

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The ongoing federal government shutdown has blocked a critical energy assistance funding source that sent $177 million to Michigan last year as the state heads into the winter.

The Low Income Home Energy Assistance Program, or LIHEAP, helps over 400,000 Michigan residents pay their energy bills by contributing to multiple energy assistance programs.

Consumers Energy’s gas rate increase, the suspension of the federal Supplemental Nutrition Assistance Program, and potentially skyrocketing health care premiums could add to the strain on vulnerable ratepayers from the pause on LIHEAP funding.

The distribution of LIHEAP funds was already in question after President Donald Trump’s administration fired the program’s staff this spring.

“I’m worried,” Katrina Metzler, executive director of the nonprofit National Energy & Utility Affordability Coalition, told Planet Detroit. “I’m becoming less confident each day that we will be able to provide consistent, uninterrupted crisis management for customers across the country.”

Many states had one to two months of LIHEAP funding left from last year’s allocation, Metzler said, adding that with the shutdown ongoing for a month, any remaining funding held by states may only last a few more weeks.

The Michigan Department of Health and Human Services did not respond to a request for comment on the status of the state’s LIHEAP-funded programs and how much funding the state may have from last year’s LIHEAP allocation.

If the U.S. Congress does agree to a deal to fund the government, it could take 30 days to disburse LIHEAP funds, if they are approved by Congress, according to Metzler.

Individual states may then need two to four weeks to begin disbursing federal funding. In other words, if Congress reaches a budget deal now, LIHEAP dollars may not make their way to ratepayers until the end of December.

Amy Bandyk, executive director of the Citizens Utility Board of Michigan advocacy group, said the government shutdown is making things worse for people in need of utility assistance, but it isn’t the primary problem.

“It was already doubtful that winter heating season support was going to be received,” she said, citing the Trump administration’s firing of LIHEAP staff.

U.S. Department of Health and Human Services spokesperson Emily Hilliard told Planet Detroit in a statement that the “Democrat-led shutdown is preventing states from receiving new funds under (LIHEAP),” and once the government reopens, staff will “work swiftly to administer annual awards. 

The “Trump administration is committed to reopening the government for the American people,” Hilliard said.

Democrats want to see Affordable Care Act tax credits extended as part of a shutdown deal. These health subsidies will end in December if Congress doesn’t act.

How Michigan distributes federal LIHEAP dollars for utility help

When operating normally, LIHEAP is only able to meet a fraction of the country’s need for utility aid, Metzler said.

“We run out of money before we run out of need,” she said, adding that about one in five families needing utility assistance are able to obtain it from LIHEAP, which receives a set amount of funding from Congress.

In Michigan, LIHEAP funds half of the State Emergency Relief, or SER, program, which assists households struggling with utility bills and helps with weatherization services. SER also receives funding from the state, according to Michigan Public Service Commission (MPSC) spokesperson Matt Helms.

LIHEAP provides a quarter of the funding for the Home Heating Credit program, which offers assistance for heating costs to income-qualified households. LIHEAP funding can also help support summer cooling, although funding for the SER program was exhausted by July in 2024. The state’s fiscal year ends Sept. 30. Smaller amounts of the LIHEAP funding go to weatherization and other programming. 

In 2024, 434,124 Michiganders received home heating assistance with support from LIHEAP, while 129,420 obtained year-round crisis support for energy costs, and 1,280 received help with home weatherization.

In a statement, DTE spokesperson Amanda Passage said the utility’s customers should not be affected by a delay in LIHEAP funding, and can still access federal assistance. 

“The state of Michigan did not use all its allocated federal funds in 2024, allowing that support to carry over into this year and remain available,” Passage said. 

The Michigan Department of Health and Human Services did not reply to requests for comment on the status of LIHEAP-funded programs in the state and how much funding the state may have from last year’s LIHEAP allocation.

Metzler said Michigan may be in a better position than some states because the Michigan Energy Assistance Program, or MEAP, could still offer some help. A monthly surcharge on electric bills funds this program, which provides utility bill assistance to eligible households. This surcharge was increased to $1.25 this year and can be raised by 25 cents a year until it hits $2. 

The surcharge is expected to raise $75 million from September 2025 through August 2026, according to the MPSC.   

MEAP is insufficient to replace LIHEAP funding, Metzler said.

MEAP receives roughly 5% of the state’s total LIHEAP funding for self-sufficiency services, according to the MPSC.

Veterans and their families who need temporary assistance with utility bills can find help via the Michigan Veterans Trust Fund.

In addition to potentially dwindling federal aid, some Michigan ratepayers could see bill increases due to Consumers’ 8.1% gas rate increase, approved Sept. 30, and future electric rate hikes. 

The MPSC is considering a proposed $436 million Consumers electric rate hike and $574 million increase for DTE Energy.

Severe winter weather could exacerbate affordability issues.

The National Oceanic and Atmospheric Administration’s prediction for December through February shows equal chances of below and above average temperatures for most of Michigan.

Utility, nonprofit programs provide some aid, shutoff protections

Nonprofit and utility programs will be available this winter to assist with energy bills and offer shutoff protections.

DTE, Consumers, and several other utilities offer the Residential Income Assistance Credit and Low Income Assistance Credit. The first provides a bill credit to customers at or below 150% of the federal poverty level or who participate in Medicaid or SNAP. The second program offers a monthly $30-$40 credit to some customers with the same qualifications or who meet other criteria.

DTE Energy offers its own shutoff protection plan, which helps households at or below 200% of the federal poverty level. Consumers has various plans offering shutoff protections for those meeting various age, income, and other criteria.

Adults 65 and older are eligible for a bill credit from DTE Energy, Consumers Energy, and Michigan Gas Utilities.

The Heat and Warmth Fund (THAW) helps administer MEAP and provides other utility assistance statewide, with support from public and private sources.

As of Thursday evening, THAW’s web portal was closed as the organization processed new applications for assistance.

“When our assistance portal opened last week on October 20, we received over 800 applications in the first two days,” said THAW spokesperson Colleen Robar, adding that this represented a significant increase in requests for assistance.  

Until THAW’s assistance portal reopens, Robar said those needing help should call Michigan 211 to connect with other available programs.

Long-term fix needed, ratepayer advocate says

The current suspension of LIHEAP funding illustrates the need for specific rates for low-income customers and other reforms, according to CUB’s Bandyk.

“Assistance programs are hugely vulnerable to political game-playing and even when the money is flowing they fail to serve the … majority of eligible customers,” she said.

The MPSC should change its regulations to make rates fairer for low-income customers, including studying the impact of each proposed rate increase on these ratepayers before an increase is implemented, she said. 

A CUB report published this week said the legislature should extend the time between utility rate hike requests, which companies can submit every 12 months.

When asked about Bandyk’s comments on low-income ratepayers, MPSC Commissioner Katherine Peretick told Planet Detroit that Michigan law states the commission must set rates based on the costs of serving customers, and rates also need to be “reasonable and prudent.”

“If we have the ability to review all of our rates for reasonableness and prudence, we also have the ability to review all of our rates for customer impact,” she said.

Energy affordability is a priority at the commission right now, Peretick said.

“I think a lot of people are starting to feel squeezed and paying attention to all of their outgoing costs.”