East Lansing Agrees to $7.8M Settlement Over Illegal Energy Fee

The City of East Lansing has agreed to a $7.8 million settlement to resolve a lawsuit challenging its 5% franchise fee on electric bills collected by the Lansing Board of Water and Light (LBWL), which the Michigan Supreme Court ruled was an unconstitutional tax requiring voter approval. This fee, imposed since 2017, was deemed a disguised levy that violated the state constitution, leading to a class action lawsuit initiated in 2020 by resident Jim Heos. The settlement, pending approval by an Ingham County Circuit Court judge, will establish a reimbursement fund for eligible customers who paid the fee from April 2019 to April 2025. A third-party entity will manage notifications and reimbursements, with the refund formula subject to court approval, ensuring the city itself will not process payments. City officials expressed disappointment with the ruling but emphasized a commitment to resolving the issue through the settlement. The case highlights the importance of voter approval for municipal taxes and the scrutiny of fees disguised as utility charges.