City Council votes to postpone ‘Phase II’ study on costs of full municipalization of Ann Arbor energy grid

On Jan. 6, the Ann Arbor City Council voted to defer the implementation of the Phase II Municipalization Feasibility Study, which would cost $1.7 million to implement, as written in the Phase I Municipalization Feasibility Study in 2023. Conducted in partnership with NewGen Strategies and Solutions, the Phase II study would officially determine how much it would cost the city to acquire all of DTE Energy’s electric assets if formally transferred to public ownership. Ann Arbor for Public Power, one of the primary proponents of a publicly-owned energy grid in Ann Arbor, requested City Council postpone Phase II in order to better investigate the potential costs of litigation with DTE.   

The Phase I Municipalization Feasibility Study found the costs of full municipalization could range from $281 million to $1.1 billion. The study posited that such changes to the local energy grid could take several years and municipalization would not likely be achieved by 2030.

A2P2 President Greg Woodring spoke with The Michigan Daily in an interview about the concerns A2P2 had regarding the Phase II feasibility study. According to Woodring, the city will have to compensate DTE for the revenue they will no longer gain from the loss of their assets. Woodring said that the city and A2P2 need to be able to defend that cost in case of litigation.

“We’re trying to come up with a legally defensible idea of what it’s going to cost,” Woodring said. “Because when the city does eventually go to DTE and say, ‘We want to buy your electrical infrastructure so that we can set up our own utility,’ they have to come with a number, and then DTE almost certainly is going to say, ‘No, we don’t think your number is high enough.’” 

In an interview with The Daily, Ann Arbor Mayor Christopher Taylor emphasized the importance of corroborating with A2P2 on next steps towards full municipalization. 

“It’s crucial that if we’re going to be spending $1.7 million on a project that is, in material part, the result of community group’s advocacy, that that community group be on board,” Taylor said. “So we’re looking to hold off voting on the contract until we can get that public and unqualified support.” 

Taylor clarified that the goals of the municipalization feasibility studies are separate from the A2Zero initiative — Ann Arbor’s overarching plan to achieve city-wide carbon neutrality by 2030 — and the sustainable energy utility proposal passed with 79% of the vote from Ann Arbor residents in November 2024. 

“The A2Zero plan does not include municipalization,” Taylor said. “The A2Zero plan (focuses) on community choice aggregation, which would require a change in state law… The concept of municipalization is a longer term project.” 

Woodring explained that while municipal energy utilities are already present across several cities in Michigan, Ann Arbor will be unique in its potential transfer of energy utilities from private to public ownership. 

“There are 42 other publicly owned electric utilities in the state of Michigan, but all of those were created as public electric utilities,” Woodring said. “None of them have ever gone from private to public like we’re proposing to do in Ann Arbor. So we’re treading some new ground here, which is very exciting. And I think that’s a big part of our mission is to prove out this model here, so that other communities can follow in our footsteps and also to put pressure on the utilities to address the concerns that we’re seeing.” 

In an interview with The Daily, Sydney Olthoff, LSA sophomore and social media coordinator for A2P2, expressed support for the postponement. Olthoff said she viewed the consideration of A2P2’s perspective as beneficial to ensure city funding is allocated properly for full municipalization.  

“I think that the postponement was good because City Council, again, was willing to listen to Ann Arbor (for) Public Power and willing to listen to its residents,” Olthoff said. “At the same time, there’s kind of two things that could happen from here and one thing is that we hope that our A2P2’s lawyers, working with the city’s lawyer, come to something that works for everyone. ” 

Daily Staff Reporter Claudia Minetti can be reached at cminetti@umich.edu.

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