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HB 5942

Public utilities: rates; requirements for rate increases; provide for. Amends sec. 6a of 1939 PA 3 (MCL 460.6a).

2025-2026 Regular Session Introduced by Erin Byrnes and 10 co-sponsors

The bill tightens oversight of utility rate increases by requiring MPSC approval, stronger hearings, and safeguards to protect consumers from abrupt or unnotified rate changes.

bill electronically reproduced 05/12/2026
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Bill Summary · HB 5942

Summary of HB 5942 (2025-2026) – Michigan

Main purpose and intent

  • The bill amends 1939 PA 3 (the public utilities act) to overhaul how utility rate increases are approved, regulated, and implemented in Michigan.
  • It tightens oversight of gas, electric, and steam utilities’ rate requests, emphasizes timely hearings, and curbs automatic or unnotified rate changes.
  • The overarching goal is to ensure more consumer-facing safeguards, clearer procedures, and greater accountability in utility rate-making.

Key provisions and changes

  • Rate increase approvals required (Section 6a(1))

    • Utilities may not raise rates or alter rate schedules without Michigan Public Service Commission (the “commission”) approval.
    • Utilities must coordinate with commission staff ahead of general rate case filings to avoid concurrent resource challenges.
    • For electric utilities serving more than 1,000,000 customers, the commission may order a delay in filing to maintain a 21-day spacing between large filers.
    • Utilities must present evidentiary support for proposed increases; interested parties must receive notice and have a right to a hearing.

  • Partial and immediate rate relief (Section 6a(1))

    • Gas utilities with fewer than 1,000,000 customers can seek partial and immediate rate relief at the time of filing.
    • The commission must conduct a hearing and issue a ruling within 180 days on such relief; final order in the full case within 12 months.

  • Temporary and interim mechanisms (Section 6a(2))

    • If the commission does not issue a final order within 180 days, utilities may implement an equal percentage adjustment to base rates (subject to safeguards and refunds if later orders differ).
    • Any such interim increases require refunds with interest if the final order would have produced lower revenues.
    • Refunds are allocated among primary customers pro rata, with separate handling for secondary and residential customers; interest rate is 5% above LIBOR, with provisions for adjusting to the utility’s authorized ROE for large portions.
    • This interim provision applies only to filings prior to April 20, 2017 (i.e., a retroactive provision with a sunset in 2017 remains in place as of this text).

  • Other rate-making discipline (Sections 6a(3)-(4))

    • The commission can issue show-cause orders as part of rate-making authority.
    • Changes not increasing the cost of service may be approved without notice/hearing.
    • No rate changes may occur based on fuel, purchased gas, or purchased steam costs without notice and a hearing.
    • Abolishes automatic adjustment clauses; formal hearings required for fuel/purchased power costs.

  • Timing and process standards (Sections 6a(4)-(9))

    • The commission must adopt filing forms/instructions for rate cases; standard forms apply to most utilities with some variations for cooperatives.
    • Special provisions exist for merchant plants and wood/wood-waste fuel scenarios (subsections (9)-(11)) that govern recovery of certain fuel/maintenance costs and set monthly caps, with CPI-based adjustments.
    • Load retention transportation rate schedules may be established for large industrial customers if altering gears toward alternative fuels is feasible.

  • Revenue decoupling and energy efficiency incentives (Sections 6a(12)-(13))

    • For electric utilities with fewer than 200,000 customers, the commission may approve revenue decoupling to offset losses from energy efficiency/demand-side programs, conditional on verified savings and reasonable forecasts.

  • Tariff and rate case timing constraints (Section 6a(6))

    • Utilities generally must wait 12 to 36 months after a complete prior rate case filing before filing a new general rate case, unless extraordinary/emergency conditions justify earlier action.
    • Utilities cannot file a new general rate case until the prior one has a final order or rates are approved under earlier sections.

  • Net metering/distributed generation tariff study (Section 6a(14))

    • By April 2018, the commission must study and implement an equitable net metering/distributed generation tariff for participating customers; must be included in post-2018 rate cases.

  • Rate increase restraints and transparency (Section 6a(15)-(16))

    • The commission cannot approve a general rate increase if:
    • Service quality standards were violated in the prior two years.
    • Residential rate increases over the previous 36 months exceed 12.5%.
    • The projected residential energy burden exceeds 6% of median household income unless mitigated.
    • The utility earned return on equity above authorized ROE in the prior year unless excess earnings are credited to customers.
    • Before finalizing any general rate increase, the commission must publish a plain-language summary on service quality, residential rate increases, projected energy burden, excess earnings, and extraordinary circumstances.

  • Definitions and interpretations (Sections 6a(17)-(18))

    • Clarifies definitions for “utility,” “general rate case,” “steam utility,” and “full and complete hearing.”

Who and what is affected

  • Entities affected:

    • Gas, electric, and steam utilities regulated by the Michigan Public Service Commission.
    • Municipally owned electric utilities are largely excluded from certain sections (per subsection 15/17).
    • Industrial/commercial customers with large transportation needs may engage in load retention transportation rate schedules.
    • Net metering and distributed generation participants (and their rate tariffs) are subject to study and future tariff adoption.

  • Consumers:

    • Residential and small business customers gain stronger protections around rate case timing, hearing requirements, and potential refunds if interim rate increases occur.
    • More transparent information about proposed rate increases and their impact on energy burden.

Procedural and timeline aspects

  • Notice and hearing:
    • Clear requirements for notice to affected service areas and opportunities for full hearings on rate petitions.
  • Scheduling:
    • Spacing requirements among large electric filers and time-bound decision deadlines (e.g., 180-day interim relief decision window; 12-month final order window post-complete filing).
  • Filings and forms:
    • Standardized rate application forms and instructions; potential adjustments for cooperatives.
  • Transparency:
    • Plain-language summaries must be posted and shared with intervenors before final orders.

Notes

  • The bill underwent introduction and committee referral in 2026; it is sponsored by a broad slate of legislators.
  • Some provisions reference or connect to earlier reform dates (e.g., a subsection with a sunset around 2017). Users should verify current applicability and any amendments adopted since introduction.

Compiled from official sources — confirm details with the bill’s official record.

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