East Lansing Settles to Spend Nearly $8 Million Reimbursing BWL Customers
The City of East Lansing announced it will pay back nearly $8 million to Lansing Board of Water & Light customers as part of a settlement in a class action lawsuit for “Franchise Fee” charges BWL put on electric bills at the city’s request, money that was then rerouted to the city.
At the end of a special City Council meeting that was held almost entirely in closed-session on Tuesday, June 17, the body voted to agree to a tentative settlement amount, but did not reveal details about the settlement. In a press release the city put out today, Friday June 20, the city announced it will create a fund of $7,800,971.13 to reimburse BWL customers. The settlement is tentative and still requires approval from the Ingham County Circuit Court, according to the press release.
East Lansing residents who paid the franchise fee that was included in BWL bills between April 2, 2019 and April 30, 2025 are eligible to be reimbursed.
As part of the settlement, a website will be created with final settlement information. A third party entity will notify those eligible for reimbursement through text, email and social media using information provided by BWL, according to the press release.
Claims will be filed through a process that will be provided to claimants after the court approves the settlement. The amount each customer receives will be determined by a formula approved by the circuit court. East Lansing will not process the reimbursement payments, the press release said.
The legal battle over the franchise fee stretches back years. In February, the Michigan Supreme Court ruled the city issued a “disguised tax” by instructing BWL to install the franchise fee and reroute the funds collected to the city. Over the last several months, the city has been negotiating the settlement in circuit court.
“While disappointed with the Supreme Court’s decision, the City Council is determined to seek an appropriate resolution through negotiation and move forward with the terms of the settlement, once approved by the Ingham County Circuit Court,” City Manager Robert Belleman said in the release. “It is important to note that the settlement provides for the City to step out of the process once the settlement funds are deposited, and the City will not be the entity processing reimbursements under the settlement.”
The settlement comes as the city grapples with serious financial troubles. As part of the motion to agree to the tentative settlement, council also voted to “authorize the fiscal year 2025 budget be amended to reflect the settlement amount the city is obligated to pay as set forth in the settlement agreement.”
Details like if insurance will help cover the settlement and how the settlement impacts the city’s short and long term financial outlook are not yet known. ELi will continue to report on the settlement and city’s finances as we find out more.