Ann Arbor for Public Power Calls for Proper Feasibility Study

Ann Arbor, Michigan.  In late August, the city of Ann Arbor issued a Request for Proposals (RFP) for a phase 2 municipalization feasibility study, with a budget of up to $1 million. This study should ideally help the community decide whether to replace DTE Energy with a city-owned electric utility. But, as currently designed, the study will not place a value on DTE’s local assets. City officials should correct this error immediately.

  “The public needs to know what it will cost to take over DTE,” says Brian Geiringer, Executive Director of Ann Arbor for Public Power (A2P2). “This study won’t tell them. That’s why it needs fixing.”

  A2P2 recently sent the city the necessary corrections. These changes would:

• Ensure that the study accurately estimates intangible costs, not just DTE’s physical assets;
• Include realistic estimates for “stranded costs,” compensation to DTE for leftover power generation capacity (if any); and “going concern,” DTE’s customer goodwill and the value of DTE’s franchise to serve Ann Arbor;
• Include a thorough and confidential legal analysis to arrive at an accurate cost estimate, not just a range of possibilities;
• Consider the larger context for stranded costs, including DTE’s future generation capacity as it closes old plants and faces growing demand for electricity.

These are easy and commonsense fixes. “What is DTE’s Ann Arbor service worth? We need an answer,” says Geiringer. “That includes estimating DTE’s intangible assets, based on state and federal rules and past practices, and legal precedent. The current study design, which lacks a legal component, can’t do that.”

 A valuation will also enable the city’s lawyers to move forward with the condemnation of DTE’s assets, as state law allows, should Ann Arbor decide to take that important step. “If this study fails to deliver a valuation, it could set the process back years,” says Geiringer. “At stake is a clean, reliable, and democratic energy future for Ann Arbor.”

Ann Arbor for Public Power, a nonprofit grassroots citizen group, has been leading the municipalization effort since 2020. For more information, go to https://annarborpublicpower.org