Ratepayers pay less, on average, to consumer-owned utilities than to IOUs.
Yes, but probably not as you may have imagined. We would bond for the acquisition of DTEs infrastructure and rights of way. The money that previously went to shareholder profit, lobbying, and executive salaries will go to fund city priorities. The end result will likely be a net plus for our city budget.
Tree Town Power will not use our tax dollars. Utilities use revenue from rates, not taxes, to pay for investments and operations. If anything, by reducing our electric rates over time, it will help to attract and retain business investment here, boosting incomes and easing tax burdens. Further, the energy production and delivery infrastructure will be rebuilt over time to prevent the power outages and avert more expansion of fossil fuel infrastructure that we pay DTE for today. Buried lines instead of falling poles and wires.
DTE includes a 9.9% return on equity (ROE) in the utility rates we pay. Municipal utilities do not earn profits, but can and do return payments to the cities that own them. Holland’s COU pays 50% of net to the City of Holland. Traverse City Light & Power returns 5% of gross to the Traverse City general fund. Our city will remain whole and there will be no impact on city budgets — except lower electric rates over time.
This sounds too good to be true!
Fortunately, it’s just math. Ann Arbor would finance its infrastructure at interest using tax-exempt bonds, and use any excess to reinvest in infrastructure. DTEs equity investments, fossil fuel infrastructure, and profits cost us — their captive customers — 9.9% on our bills, and that is not including the incalculable cost to our future of their lobbying to maintain our reliance on fossil fuels.
Substantial new investment will be needed to strengthen our grid and achieve our A2 Zero climate goals. Financing these investments at lower interest rates and keeping profits invested in the community will keep rates low while improving reliability, something only a community-owned utility can do.