Ask ELi: How Much Money Goes from BWL to Lansing?

Friday, October 10, 2014, 8:03 am
By: 
Alice Dreger

Note: This article begins a new weekly Friday feature of ELi called “Ask ELi to Investigate.” This feature takes questions from readers and assigns a citizen-reporter to investigate the answer. If you’d like to submit a question for “Ask ELi to investigate,” use our contact form.

A reader asks: How much money does the Lansing Board of Water and Light (BWL) give from its profits to the City of Lansing each year?

Background: The widespread and prolonged power outage last winter caused many East Lansing residents to pay attention to the governance and economic structure of the Lansing Board of Water and Light (BWL), their electrical power provider, in ways they had never bothered before. What many learned for the first time is that, although BWL has sometimes said BWL is “owned by its customers,” in fact BWL is owned by the City of Lansing.

The City of Lansing owns BWL because, by democratic vote, the people of Lansing founded BWL in 1885. Because BWL is a municipal-owned utility, it is not subject to oversight from the Michigan Public Service Commission. It is, instead, run by an eight-member Board of Commissioners who are Lansing mayoral political appointees. Commissioners are appointed for four-year terms by the Mayor of Lansing and are confirmed by the Lansing City Council.

This structure means that BWL customers who live outside the City of Lansing—including East Lansing BWL customers, as well as BWL customers in Meridian Township, DeWitt, and elsewhere—have no voting representation on the BWL Board and also have no protection from the Michigan Public Service Commission. Regardless of where they live, all customers have their BWL utility payments go into a system that helps fund the Lansing City budget, and their rates and service are subject to Lansing politics.

The question, again: How much money does the Lansing Board of Water and Light (BWL) give from its profits to the City of Lansing each year?

The answer: I asked Steve Serkaian, BWL’s Director of Communications, for the most recent figure available for the lump sum payment from BWL to the City of Lansing treasurer. He responded that, “The BWL’s Return on Equity payment to the City of Lansing in Fiscal Year 2013-14 (July 1, 2013 - June 30, 2014) was $20,608,093.” (This lump sum payment is sometimes called a “return on equity” and sometimes called a “payment in lieu of taxes.”)

The City of Lansing budget for fiscal year 2013-2014 was $191,797,000 in total, including $112,000,000 for Lansing’s general fund. This means that 10.7% of all of Lansing’s budget funds, and 18.7% of Lansing’s general fund, came from BWL’s profits that year.

How much of BWL’s profits will go to the City of Lansing each year is determined by officials in Lansing.