LANSING, Mich. (WLNS) – When a woman who spoke with 6 News moved to Lansing in 2021, she found she had one more expense she hadn’t counted on – a security deposit for the Lansing Board of Water and Light to the tune of $250.  

“They said even with a good credit history and a long-standing history with DTE Energy in Detroit, that they needed a deposit to start the utilities,” she tells 6 News of her experience becoming a BWL customer in 2021. “Never mentioned anything about paying it back, so I assumed they just hold on to it as long as you are a customer.” 

She became one of 19,992 customers of the BWL who had to pay a security deposit to have utilities at her Lansing home. Despite being assessed the deposit, the BWL’s own rules tell a different story. While customers with poor credit or no credit may be assessed a deposit, those who have established a history with another utility can get a letter showing their good credit.  

Rule 7.4 (d) 6 reads: “The Customer provides an acceptable credit reference letter from a similar utility company for a similar account. Account must have been in the customer’s name and maintained for a minimum of 12 consecutive months.” 

She says she was never told that.  

Her story comes amid a 6 News investigation into the BWL and other utilities’ administration of security deposits. BWL argues the deposits, of at least two months of estimated use at the property, prevent someone from walking away from the account – and saddling BWL with uncollectible services. In those instances, it’s the customers of BWL who foot the bill.  


“Requiring security deposits in certain instances is a common and sound business practice to avoid unnecessary loss,” says BWL Spokesman Josh Hovey. “Once customers requiring security deposits fulfill their on-time payments over 12 consecutive months, BWL fulfills its obligation by refunding security deposits with interest.”  

The public utility tells 6 News as of Nov. 1, it is holding $5,518,630.36 in deposits for 19,992 customers. The oldest account dates back to 1985 – with a deposit of $161.28.  

While deposits average about $275, the amount each customer pays is double their average monthly bill. 

BWL has 158,000 customers receiving water and electricity. That means more than 12.5% of their customers currently have a deposit on their account. A DTE spokesman says about 150,000 customer accounts, out of 2.3 million customers – or 6.5% – have security deposits. Consumers Energy did not respond with how many accounts have security deposits.  

In a September 2023 report to the Michigan Public Service Commission, the staff said it does “not believe that utilities are abusing their rights to collect deposits.”  

As evidence, the staff reported that in 2022 DTE obtained 72,779 deposits from residential customers: 2% of their customer base. Consumers Energy collected 38,019 deposits from residential customers, which is 1% of their customer base.   

That same year, BWL collected 4,982 deposits, which is 3% of their customer base.   

The MPSC does not regulate the BWL.

Deposits are assessed to those who have no credit history or poor credit history when they start an account, or those who have experienced a shut-off due to failure to pay. The utility holds the deposit until the consumer has made 12 consecutive on-time, full-pay payments for their accounts. Failing to meet that threshold triggers a restart of the 12-month period.

In one instance, BWL records show one account has had an active deposit for 38 years. The reason? Hovey says that the customer has not satisfied the 12-month consecutive on-time, full-pay payments to have the deposit refunded.    

Rick Bunch, executive director of Michigan Municipal Association for Utility Issues. (WLNS)

Rick Bunch, executive director of the Michigan Municipal Association for Utility Issues, says the deposits are unnecessary. The utilities already have “leverage” to prevent an account from becoming uncollectible.  

“The problem is that it’s a risk management strategy and it’s being conducted in a way that is blind to the actual risks that these customers posed to the company,” says Bunch. “The most common reason to collect a deposit from a customer is that they’ve had a disconnection. And there’s a superficial logic to that. They got disconnected because they didn’t pay. Therefore, let’s make sure that that doesn’t happen again by getting their money ahead of time through a deposit. The reason that logic doesn’t work is that people are highly motivated to get their power reconnected, and to do that they have to make a big down payment on what they owe and get on to a payment plan for the rest of it.” 

He also challenges the idea that a person with bad credit or no credit will require a deposit.  

“That practice is also unjustified if it’s based on general credit records and the reason is that whether you paid your credit card bill or other forms of debt is not a good indicator of whether you pay your utility bill,” Bunch says. “Most people pay their utility bill first. And so using a general credit record, it’s a really bad indicator about whether somebody is a risk to the company I’m turning into uncollectible.” 

That’s something the woman tells 6 News, as well.  

“I think that it’s a really necessary conversation to have that being below median income or being below the poverty line doesn’t make you irresponsible,” she tells 6 News. “It makes you a product of your circumstances, and most people will pay their utilities first because they need to survive.” 

Hovey, the spokesperson for BWL, says the utility is working to assist people who are struggling to pay their bills.  

“BWL and over a dozen local partners have hosted several Community Resource Fairs since 2021 at various community centers throughout Lansing to connect residential customers and greater Lansing residents behind on bills to information on resources and financial assistance per available funding and eligibility,” Hovey says.  

According to BWL’s data, 12,419 customers have had security deposits assessed to their accounts since the inception of the Community Resource Fairs. That’s over 60% of the utility’s currently held security deposit accounts.   

Hovey says the eight Community Resource Fairs have helped struggling customers with an estimated $2.7 million in bills.   

“This is a win-win for struggling customers and all BWL utility customers who are protected from uncollectible debt and its negative impact on future rate increases,” he says.  

Bunch, the utility expert, is not so clear on the success of the program.   

“I’m glad BWL is putting on the resource fairs,” he says. “But it’s not making a big enough dent.” 

Lansing City Council Member from the First Ward Ryan Kost. (WLNS)

6 News shared the details of its investigation with elected officials. Lansing First Ward Councilmember Ryan Kost called the length of time and amount of money BWL is holding in security deposits is “ridiculous,” “callous,” and “cold.” 

“We have residents that struggle to put food on the table and holding $5.5 million, plus whatever interest they’ve earned over that, go a long way,” he says. “For a lot of families, especially as it’s getting colder outside, I think sometimes we take for granted that we can just flip on the heat and we have heat and we just auto pay the bill. Well, but for a lot of people, it’s not that simple. They have to pay a portion of the bill because that’s all they have. They’re on fixed incomes and we’re not just talking about working poor; senior citizens, too.”

He says he wants solutions by January.

“This is a crisis,” he tells 6 News.