Summary of Michigan HB 5879 (Session 2025-2026)
Proposed by: Michigan House of Representatives
Tied to: HB 5880’26
Purpose
- The bill amends section 6a of 1939 PA 3 (MCL 460.6a) to strengthen the oversight of utility rate changes and, notably, to begin a process that ties residential rate reductions to savings from personal property tax exemptions. It is positioned as part of a broader framework governing public utilities, rate regulation, and related administrative procedures.
Key Provisions and Changes (highlights)
- Rate and filing safeguards (subsection (1) and related):
- Utilities (gas, electric, and steam) cannot increase rates or alter rate schedules without explicit commission approval.
- Utilities must coordinate with the commission staff before filing general rate cases to avoid concurrent resource challenges and, for electric utilities with more than 1,000,000 customers, may be ordered to stagger filings with 21-day spacing.
- Notice to, and hearing for, affected customers and communities are required.
- Utilities may use projected costs/revenues for a future 12-month period in their rate requests.
Timelines and process (subsection (1)):
- The commission must determine completeness of filings within 30 days; if not completed within 30 days, the filing is considered complete.
- For smaller gas utilities (fewer than 1,000,000 customers), there is a potential for partial and immediate rate relief, with a hearing window and a final determination within specific timeframes (180 days for initial relief, 12 months for a final order).
Interim relief and refunds (subsection (2)):
- If the commission does not issue a final order within 180 days after a complete application, the utility may implement a provisional equal-percentage change to base rates.
- If interim increases occur, refunds (with interest) may be required if final orders differ from interim results. Interest: 5% plus LIBOR; special rules apply for large adjustments and for portions exceeding a defined percentage of the annual revenue increase.
Rate case timing and eligibility (subsections (5)-(7)):
- If no final decision within the standard window, the petition may be approved by default (subject to other constraints).
- Utilities generally cannot file a new general rate case until the prior case is resolved or approved under specified provisions.
Special rate mechanisms and allocations (subsections (7)-(8)):
- Provisions for load retention transportation rates for large industrial/commercial customers, with conditions to ensure cost recovery for discounts if those customers reduce or shift load.
- Standard rate application forms required for all general rate cases; allowances for cooperative electric utilities to file based on their existing regulatory framework.
Revenue decoupling and efficiency (subsections (12)-(13)):
- For utilities with fewer than 200,000 customers, the commission can approve revenue decoupling to offset decreased sales resulting from energy efficiency and conservation measures, provided certain savings tests are met.
Net metering/distributed generation tariff (subsection (14)):
- By 2018 (and into rate cases after), the commission must establish a tariff reflecting equitable cost of service for customers participating in net metering or distributed generation programs, with exceptions for pre-existing net metering participants.
Personal property tax exemptions reconciliation (subsection (15)):
- By 60 days after the 2026 amendatory act’s effective date, each natural gas and electric utility must report tax-year savings from exemptions on personal property tax (as per the General Property Tax Act).
- Within 30 days of receiving each utility’s savings data, the commission must begin a contested-case reconciliation process to determine how residential rates should be reduced by the amount saved due to these exemptions.
- End result: an order decreasing residential rates by the amount saved from personal property tax exemptions.
- Post-reconciliation, utilities may not file a general rate increase for two years.
Scope note (subsection (16)):
- Excludes municipally owned electric utilities from certain definitions of “utility” and related rate actions, unless otherwise provided.
Definitions (subsection (17)):
- Clarifies terms such as “full and complete hearing” and “general rate case.”
Enacting condition
- The act would take effect only if House Bill 5880’26 is enacted into law.
Who is Affected
- Gas, electric, and steam utilities regulated by the Michigan Public Service Commission (non-municipal utilities).
- Residential customers who would benefit from any rate reductions resulting from the personal property tax exemption reconciliation.
- Large electric utilities (with more than 1,000,000 customers) in terms of filing schedules.
- Large industrial/commercial customers eligible for load retention transportation rate schedules.
- Net metering and distributed generation participants, through the tariff reforms.
Procedural and Timeline Aspects
- Matching set of rate-case procedures, hearings, and timelines typical of Michigan’s regulatory framework, with explicit deadlines for filing completeness, notice, hearings, and final orders.
- A targeted reconciliation process to calibrate residential rate reductions to tax-exemption savings, with a two-year bar on new rate increases following the reconciliation order.
Notes
- HB 5879 includes a tie-bar reference to HB 5880’26; passage of HB 5879 is contingent on HB 5880’26 becoming law.
- The bill is introduced in April 2026 and referred to Government Operations; proposed sponsors include Rep. Jamie Thompson and a list of co-sponsors.
