New Report Says Ann Arbor, Mich., Public Power Utility is Economically Feasible

by Paul Ciampoli
APPA News Director
September 25, 2023

The City of Ann Arbor, Mich., on Sept. 22 released a draft report that shows a city-owned municipal electric utility is both economically feasible and preferable to continued DTE Energy ownership of the local grid over the long term.

The report also indicates that municipalization is entirely consistent with the city’s climate action goals, including 100 percent renewable power.

The report, “100 Percent Renewable Energy Options Analysis,” was produced by policy consulting firm 5 Lakes Energy.

“With feasibility now established, we look forward to working with our elected city officials and city staff to advance the process of establishing a public power utility that replaces DTE,” said Ann Arbor for Public Power president Greg Woodring. Ann Arbor for Public Power has been leading the municipalization effort since 2020.

The report took over a year to complete, and included five separate tasks: an energy options analysis, the municipalization feasibility study, a sustainable energy utility rate analysis, and two procedural tasks. Several options for meeting the city’s renewable power goals were considered. 

Ann Arbor for Public Power said that the report’s single most important conclusion was that municipalization makes long term financial sense for Ann Arbor.

Subcontractor NewGen Strategies & Solutions modeled operating revenues and costs of a city-owned electric utility versus continued DTE ownership of the grid, and concluded that a public utility can reliably deliver electricity to customers at comparable or lower rates.

“The report confirms what we already knew from the experience of other cities: that a public power utility can deliver superior service more affordably than DTE, because the millions in current annual DTE profits instead will remain in the community to be reinvested in infrastructure or returned to ratepayers,” said Woodring.

The city’s next step is to study municipalization in more detail in order to place an accurate valuation on DTE’s assets and to estimate more closely the likely acquisition cost.

“We suggest that the city authorize a Phase 2 Feasibility Study to characterize more precisely the costs and risks of the MEU approach,” writes 5Lakes in its executive summary. The report also recommends concurrent development of the SEU while laying the groundwork for full municipalization.