Ann Arbor to Vote on Sustainable Energy Utility

There are a number of ways that a community can achieve a totally renewable energy system. Ann Arbor voters will have the chance to seize upon one option, should a majority go along with the first charter amendment proposal on November 5 to establish a sustainable energy utility. 

The official wording of the proposal is: “The City of Ann Arbor proposes to create within its boundaries an opt-in, publicly owned Sustainable Energy Utility (“SEU”) to (i) supply, generate, transmit, distribute, and store electricity, heat, cooling, light, and power (all from renewable sources); and (ii) provide energy-related services. The SEU could, for example, provide individual or networked rooftop solar panels, heat pumps, geothermal systems, or batteries to customers to supplement existing utility services. The SEU will be fee-based. This proposal does not authorize new taxes. Shall the Charter be amended to authorize the City to establish, construct, own, and operate an opt-in Sustainable Energy Utility?”

What does this proposal mean?

So, what does all of this legalese mean in plain English? An SEU empowers City Hall to establish a new utility that supplements the existing power supply and assists homeowners who volunteer for it to install renewable power infrastructure onto their properties. That could mean solar panels on a house’s roof and batteries in the garage; or just solar panels that feed directly into your business and to the grid, but don’t store power; or a geothermal system. Or maybe you could opt to get all options. The limits are only to what you want on your property, and what is feasible within the laws of physics.

If you don’t want renewable power installed on your property or business all you have to do is not sign up. That is because this is not a replacement for DTE’s power grid. It is strictly a voluntary scheme, where you would pay the SEU rate from the power system on your property and any excess would be sent into the wider grid.

A set of the scenarios for voters to consider on the SEU. Image from City of Ann Arbor.

As of October 15, 112 households have expressed interest so far according to Missy Stults, the sustainability and innovations director at the city of Ann Arbor. In order for orders to be made, for anything to be installed, or for the SEU to get started, Ann Arbor officials told Current that they would need to get at least 20 megawatts worth of interest from members of the public officially registering their properties to volunteer for green power production. 

“We thought very intentionally about what are the points of confusion that the public has, so that we can be really, really clear,” Stults said. She was part of the team who wrote the ballot language. Stults added “It is opt in – it is not mandatory. It is not taxes – utilities are fee based, so it does not increase taxes. It is authorized only to do renewable energy; we are not asking for a utility that does natural gas or coal fired power plants. And this is supplemental, so it isn’t a takeover. We wanted people to understand that this is in addition to what you have – it will replace some of what you currently have from the being grid, but this is about fundamentally [building an] additional power utility that provides resilient, reliable and affordable power from renewable energy sources.”

An explanation of the choice voters have on the SEU question. Image from City of Ann Arbor.

Municipalization and SEU

This is different from setting up a municipal utility. This socialist model would mean decoupling entirely from the for-profit regional electrical power utility serving Ann Arbor, Detroit Thomas Edison (DTE), and having the city own and operate its own power production and distribution system. Most municipally owned and operated power utilities were set up during the birth of electrification over a century ago, for instance, in communities as large as Los Angeles or Seattle and as small as nearby Chelsea. 

If voters approved municipalization in addition to, or instead of an SEU, the city would enter a lengthy legal proceeding to the tune of millions of taxpayer dollars to set out the final agreement to end the relationship and would then have to fork over millions more to purchase the power lines, transformers and local electrical generation equipment used to power the city. Ann Arbor wouldn’t even be a fully sustainably powered community at that point. Millions – perhaps tens of millions more – would still be needed to build renewable power infrastructure across town, all while still more taxpayer dollars would need to be sent to DTE anyway to keep the lights on lest the city run out of electricity in the meantime. 

Some Ann Arborites do want to ditch DTE Energy altogether over reliability complaints and what they see as a lack of urgency in attaining a fully sustainable power system. DTE has committed to be carbon neutral by 2050, two decades after Ann Arbor’s official decarbonization goal. It is important to make clear that an SEU wouldn’t necessarily scuttle municipalization and isn’t necessarily a replacement. 

“It’s not specifically our proposal, and we are officially neutral on it, but we hope that if voters do choose to vote for it that it is successful and we’ll be there to support it being as good as it possibly could be and it’ll be a bridge to full municipalization, which is what we are continuing to fight for,” Greg Woodring, president of Ann Arbor for Public Power, a grassroots organization advocating for municipalization of Ann Arbor’s electrical grid, said. “I certainly hope it can be a stepping stone. There is a certain amount of sentiment out there that SEU is an alternative to municipalization. I don’t think that that’s the right viewpoint of it. The SEU has some good things that it can do – expand the amount of solar we can have on our homes, may allow us to do some energy efficiency upgrades that would be more difficult to do, and in the future they even have some aspirations to opening up to microgridding.”


RELATED: Municipal Power, SEU or DTE? Which Option Can Get Ann Arbor to Carbon Neutrality Fastest?


DTE Energy declined Current’s offer for an interview for this article. Instead, DTE Energy spokesman Ryan Lowry provided the following emailed statement: “DTE is dedicated to supporting the City of Ann Arbor’s clean energy goals. Much like DTE’s MIGreenPower – which is one of the largest voluntary programs in the country – the SEU would provide Ann Arbor’s residents and businesses with another option to reduce their own carbon emissions. When coupled with DTE’s planned investments in clean energy, these voluntary, fee-based programs help accelerate economy-wide decarbonization while maintaining reliability and affordability.”

It is important to emphasize however that a SEU participant won’t necessarily always be paying that rate. If the sun isn’t shining sufficiently, or if the batteries run out, you would revert to the DTE Energy provided grid, and therefore pay DTE rates for the duration of time that your renewable setup can’t provide adequate electricity. 

This is why Woodring added that while he thought that the passage of an SEU ballot measure wouldn’t produce the decarbonization results that municipalization would. Even if the SEU is a success, Woodring argues “we would still be reliant on DTE. Even for people who subscribe to the SEU, which won’t be the entire city, will still have to get their power from DTE when their solar is not enough to keep up …which means that the reliability issues that we’re seeing with DTE aren’t going to go away with SEU. So, while there are some positives with the SEU, it’s not sufficient by itself.”

Stults says that the average Ann Arbor power bill is about 19 to 26 cents right now. If the measure passes and enough households and businesses participate, Stults estimates that that could go down to around 16 cents. DTE Energy currently charges between 12.67 cents and 16 cents for off-peak power consumption, and between 21 cents to 24.95 cents during peak times. The city estimates that SEU prices would be around 16 cents for SEU participating businesses and households. 

“If you generate more power than you use, you sell that power back to DTE at the inflow-outflow rate,” Stults said in an email.

Renters could also participate in the program, should it be approved, so long as both the renter and the City of Ann Arbor gets formal permission from the landlord. Indeed, Stults pointed out that this program would provide landlords “make significant investments in their properties, to bring them up to a higher efficiency and decarbonization standard without them having to put up all of that capital out up front.” A renter, or group of renters, could in this scenario have their building go green, while the landlord could get help paying for both the modernization of the insulation and electrical infrastructure necessary to add the solar or geothermal system. Landlords would have to make those investments, but the city would use what Stults called “on-bill finance” to make the investment more financially worth it for the building owner. 

The SEU will not happen if Ann Arborites reject it at the ballot box, or if not enough people register interest. Anyone who is interested in participating in the SEU can register interest with a simple online form. 

“If you are interested in municipalization, then I think it’s reasonable to view the SEU as a test case. It’s an opportunity for the city to run an energy utility, to demonstrate that the city’s able to do that, thereby knocking down one of the potential hurdles to full municipalization,” Ann Arbor Mayor Chris Taylor said in an interview. “If you’re against municipalization, and don’t want the city to purchase DTE’s assets, the SEU is right for you also because it doesn’t involve the purchase of DTE’s assets, new taxes, and it is only paid for by the people who sign up. It’s a win-win for both populations.”

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Drew Saunders is a freelance business and environmental journalist who grew up just outside of Ann Arbor. He covers local business developments, embraces his foodie side with reviews restaurants, obsesses over Michigan's environmental state, loves movies, and feels spoiled by the music he gets to review for Ann Arbor!

Drew Saunders
Drew Saundershttps://drewsaunders.com/
Drew Saunders is a freelance business and environmental journalist who grew up just outside of Ann Arbor. He covers local business developments, embraces his foodie side with reviews restaurants, obsesses over Michigan's environmental state, loves movies, and feels spoiled by the music he gets to review for Ann Arbor!

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