Ann Arbor City Council adopts resolution opposing ‘financially reckless’ Proposal E, directs legal action

- Oct 07, 2026

The Ann Arbor City Council on Monday, Oct. 5, 2026, adopted a resolution opposing Proposal E, a citizen-initiated ballot measure that would modify the City Charter to create an Ann Arbor Municipal Electric Utility Board and require the city to establish a second municipal electric utility.

The resolution concludes that Proposal E would expose the city and its residents to substantial financial and operational risks, create conflicts within the City Charter and jeopardize established city goals because “the city can responsibly advance only a limited number of major priorities at once.”

Concerns identified in the resolution include:

  • Proposal E may authorize acquisition of DTE property without another vote of the people. The resolution notes that Proposal E does not include language explicitly requiring another vote of the people before acquisition of DTE’s poles, wires and other property.
  • The proposal does not identify a funding source. Proposal E includes no tax, millage or other dedicated source of funding for creating or operating a municipal electric utility. The resolution states the city would therefore be required to raise taxes, borrow money, redirect existing revenue or reduce other city services.
  • Acquiring DTE’s distribution system would likely cost hundreds of millions of dollars. The resolution states that establishing the proposed utility would, as a practical matter, require the city to acquire DTE’s aging local electric distribution system, potentially at a cost exceeding $1 billion.
  • Condemnation proceedings would create significant additional costs and financial risk. An attempt to forcibly acquire DTE’s assets would likely result in prolonged and costly litigation. The resolution also raises the concern that the Uniform Condemnation Procedures Act could require the city to place the estimated value of DTE’s distribution system in escrow before the city could begin collecting utility rates.
  • The city would have to build an electric utility operation from the ground up. Ann Arbor currently has no budgeted utility staff, billing system, ratemaking capacity, vehicles, equipment or facilities necessary to operate an electric utility. The city would have to establish those functions while also ensuring reliable, 24-hour electric service from the first day of operation.
  • The city would still need to secure an electricity supply. DTE’s local distribution system delivers electricity but does not generate it. The city would need to obtain sufficient power on the wholesale market and meet state requirements for demonstrating adequate future supply. The resolution states that securing enough additional renewable energy to meet citywide demand could take years and cost hundreds of millions of dollars.
  • Acquiring DTE’s distribution system would reduce tax revenue for the city and other public entities. Acquiring DTE’s local distribution property would remove it from the tax rolls, according to the resolution, eliminating approximately $8.5 million in annual tax revenue, including about $2.9 million for Ann Arbor Public Schools and $2 million for the City of Ann Arbor.
  • The proposed utility board would receive broad independent authority. Proposal E would give a nine-member Municipal Electric Utility Board powers currently reserved for the City Council and the City Administrator, including the authority to acquire property, enter into contracts, borrow money, and hire and direct staff. City Council could amend or void the board’s operational decisions only with eight affirmative votes, “an extraordinary threshold that inverts ordinary majority control and strips residents of meaningful elected oversight of an enterprise able to obligate millions of dollars.”
  • The proposal would create conflicts within the City Charter. The resolution states Proposal E conflicts with existing City Charter provisions governing the creation of boards and departments, contracting authority, property acquisition and staffing decisions.
  • Proposal E could jeopardize progress on the voter-approved A2SEU and other city priorities. Ann Arbor voters approved the Ann Arbor Sustainable Energy Utility in 2024 with nearly 80% support. The A2SEU is already operating and is expected to serve approximately 100 homes with 100% renewable energy by the end of 2026, with plans to expand to as many as 1,000 homes in 2027. The resolution states Proposal E could divert significant city resources and attention from that work, as well as from other city priorities, including its commitments to climate action and affordable housing.

The resolution makes clear that council’s opposition to Proposal E does not change the city’s longstanding concerns about DTE rates, service and outages, including their disproportionate effects on marginalized and under-resourced residents. The city will continue intervening in DTE rate cases before the Michigan Public Service Commission, advocating for improved service and outcomes consistent with the city’s climate goals, and working with Ann Arbor’s state legislative delegation to strengthen DTE oversight and regulation.

The resolution directs the City Attorney, at the appropriate time, to challenge the legality of Proposal E, including its effect on the City Charter.

For more information:

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Media Contact: 

Steve Kilar, Communications Director, skilar@a2gov.org 

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