Municipalization Study FAQs

Answers to some Municipalization Study frequently asked questions

The topic of energy often receives a lot of buzz in Ann Arbor. In 2023, Ann Arbor conducted a holistic energy-options study to analyze possible pathways to achieving the A²ZERO goal of 100% community-wide carbon neutrality by 2030. In 2024, Ann Arbor voters authorized the city to create an innovative, renewable, supplemental municipal energy utility. And today, the Ann Arbor Sustainable Energy Utility is already operating in homes and gearing up for expansion citywide in 2027.

If you have a question not addressed here or you would like additional information, please contact us at sustainability@a2gov.org.

What is a municipal electric utility?

There are varying forms of municipal electric utilities, but the most common is a municipally-owned electric utility that serves a community’s electric needs by owning and maintaining the electrical distribution infrastructure (the local “grid”) and selling electricity from third-party generators to its customers, who are physically connected to that grid.

Most municipal electric utilities that exist today were originally formed as municipal electric utilities, which means they never went through the process of municipalization (see the appendix for list of Michigan’s municipal electric utilities).

What is municipalization?

Municipalization is the legal process of transferring ownership of private assets to a local government. In the context of electric utility service, municipalization traditionally means taking over the assets and operations of the electric utility that currently serves the municipality. To do this, a municipality must “take” the current utility’s property and provide just compensation for that property. The amount of compensation is generally determined through a court process, which seeks to determine the fair value of the utility’s assets and operations that are necessary to serve the municipality. The Michigan Constitution requires that a city receive the approval of at least three-fifths of its voters before acquiring a utility.

Is the Ann Arbor Sustainable Energy Utility a municipal utility?

Yes! The Ann Arbor Sustainable Energy Utility (A2SEU), authorized by City voters in November 2024, is a municipal utility. However, unlike traditional municipal electric utilities that provide all a community’s electricity needs, the A2SEU is a supplemental utility that is only authorized to provide renewable energy. That means the A2SEU is focused on the immediate generation of clean energy in Ann Arbor, thereby improving local resilience and reliability while also greening our power supply.

Has the City of Ann Arbor studied municipalization via the taking of DTE Electric’s assets?

Yes. In 2023, Ann Arbor conducted a holistic energy options study to analyze possible pathways to achieving our A²ZERO goal of 100% community-wide carbon neutrality by 2030, which included an expert-led study of municipalization through condemnation of DTE’s assets. Please visit the city webpage dedicated to this topic for more information and the full report that resulted from this study.

Did the 2023 report include any findings regarding how much it would cost the City of Ann Arbor to take DTE’s assets?

Yes. The study found the cost of acquiring DTE’s distribution assets and business in Ann Arbor — excluding substations — could plausibly range between $281 million and $1.15 billion. Because this study was performed in 2023, these estimated costs do not include recent or planned investments in the grid in Ann Arbor (approximately $110 million over the past five years and $250 million planned over the next five), nor do they take inflation into account.

The consultants also estimated Ann Arbor would need to spend approximately $95 million on the development of 10 new substations and $19 million on new transmission lines, which means the City would have to spend an estimated $114 million in addition to the purchase price of DTE’s assets to become operational.

Are there any costs associated with municipalization via the taking of DTE’s assets that are not included in the 2023 report’s cost estimates?

Yes. The cost estimates in the 2023 study do not include the cost of operating the utility, the cost of investments to improve the reliability of the existing electrical system, or the legal costs associated with the municipalization process.

Why is there such a large possible cost range?

The methodology that would be used by a court or regulatory body for setting an acquisition price is not clear, because municipalization processes are uncommon nationally and have no recent precedent in Michigan. The last traditional municipal utility that formed in Michigan was in 1935 (which was a previous municipal utility that was sold, then repurchased), meaning there are no contemporary examples to draw upon.

Did the 2023 report include any findings regarding the impact to ratepayers of municipalization via the taking of DTE’s assets?

Yes. The study found that – assuming an overnight conversion from DTE to a municipal electric utility – rates in the first year could range from 9% less to 38% more than DTE’s rates (based on 2023 pricing and rates). As stated in the 2023 report, this wide range is “primarily due to uncertain legal outcomes that would impact costs of municipalization and generally cannot be resolved short of undertaking municipalization.”

If the City of Ann Arbor were to municipalize via the taking of DTE’s assets, would it generate all of its own power?

No. The purchase of DTE’s assets in Ann Arbor would not include any generation assets, which means the City would have to purchase power on the market through the Midcontinent Independent System Operator (MISO).

Has the city explored municipalization further following the 2023 report?

In 2025, City Council considered a resolution to fund a second, phase-two study of traditional municipalization. The resolution did not pass. so the phase-two study did not move forward. However, significant work is underway to advance clean, reliable, and affordable energy through programs such as the city’s Sustainable Energy Utility, Ann Arbor Solarize, A²ZERO Rebates, and more.

If the City of Ann Arbor were to proceed with traditional municipalization via the taking of DTE’s assets, what is the likely timeline?

As mentioned above, there are very few contemporary examples of successful municipalization efforts and no recent, successful efforts in Michigan, so it’s not possible to know how long this would take. However, any reasonable estimate would be measured in years, not months.

Are there other municipal electric utilities in Michigan?

Yes. Bay City is the oldest (1868) and the newest (aside from the A2SEU established in 2025) is Zeeland (which was re-established in 1935). See Appendix A for a table of Michigan municipal utilities and when they were formed.

Appendix A: Municipal Utilities in Michigan

Utility/ website	City Name	Year Founded	Customers Served
Village of Baraga	Baraga, MI	No data
City of Ann Arbor Sustainable Energy Utility	Ann Arbor, MI	2025
City of Bay City	Bay City, MI	1868	20,000
City of Charlevoix	Charlevoix, MI	No data	4,400
Chelsea Light and Power	Chelsea, MI	1898	2,800
Village of Clinton	Clinton, MI	1893
Coldwater Board of Public Utilities	Coldwater, MI	1891
Croswell Municipal Light & Power Dept.	Croswell, MI	No data
City of Crystal Falls	Crystal Falls, MI	1890
Daggett Electric Department	Daggett, MI	No data
City of Dowagiac	Dowagiac, MI	No data
City of Eaton Rapids	Eaton Rapids, MI	1898	2,755
City of Escanaba	Escanaba, MI	No data
City of Gladstone	Gladstone, MI	1897
Grand Haven Board of Light & Power	Grand Haven, MI	1896	14,500
City of Harbor Springs	Harbor Springs, MI	No data	3,600
City of Hart	Hart, MI	No data	1,300
Hillsdale Board of Public Utilities	Hillsdale, MI	1892	6,300
Holland Board of Public Works	Holland, MI	1893	28,000
Village of L'Anse	L'Anse, MI	No data
Lansing Board of Water & Light	Lansing, MI	1885	95,000
Lowell Light & Power	Lowell, MI	1895	2,600
Marquette Board of Light & Power	Marquette, MI	1889	16,000
City of Marshall	Marshall, MI	1893	4,500
City of Negaunee Dept. of Public Works	Negaunee, MI	1885
Newberry Water and Light Board	Newberry, MI	No data
Niles Utilities Department	Niles, MI	No data	7,500
City of Norway	Norway, MI	No data
Village of Paw Paw	Paw Paw, MI	1890
City of Petoskey	Petoskey, MI	No data	5,481
City of Portland	Portland, MI	1896	2,500
Sebewaing Light & Water	Sebewaing, MI	1911
City of South Haven	South Haven, MI	No data	7,400
City of St. Louis	St. Louis, MI	No data	1,900
City of Stephenson	Stephenson, MI	No data
City of Sturgis	Sturgis, MI	1896	7,200
Traverse City Light & Power	Traverse City, MI	1912	12,000
Union City Electric Department	Union City, MI	"Early 1920s"
City of Wakefield	Wakefield, MI	No data
Wyandotte Municipal Services	Wyandotte, MI	1894	12,000
Zeeland Board of Public Works	Zeeland, MI	1902	6,200