ANN ARBOR, MI — Ann Arbor’s plan to achieve carbon-neutrality by 2030 involves going out to the market and purchasing 100% renewable energy on behalf of all residents, businesses and other entities in the city.
That’s known as community choice aggregation, a type of program permitted in other states, and city officials are hoping to convince state lawmakers to allow it in Michigan.
As City Council voted this week to adopt the city’s A2Zero plan, a representative from DTE Energy, the Detroit-based energy provider for the region, raised concerns about that aspect of the plan, suggesting there are other alternatives.
DTE marketing director Henry Decker, an Ann Arbor resident, commended the city for its commitment to significantly reduce carbon emissions, saying DTE is on a similar journey.
“We have committed to reducing our carbon emissions to net zero across our electric utility services by 2050 and have already reduced our electric emissions by 25% from 2005 levels,” Decker told council.
DTE has reviewed Ann Arbor’s plan and there are opportunities for the city and DTE to partner, Decker said.
For instance, he said, DTE could “develop a customized renewable electricity solution that promotes renewables in Michigan directly attributable to Ann Arbor, including community renewable projects such as solar and wind.”
They also could explore opportunities to leverage a “voluntary green natural gas program” to allow customers to reduce up to 100% of their emissions from natural gas, Decker said, and expand Ann Arbor’s participation in DTE’s electric vehicle adoption program to support electrification of vehicles, including public transit, school buses and delivery vehicles.
Decker also suggested exploring “renewable natural gas” as an “economic and clean approach” for heavy-duty vehicles such as garbage trucks and tractor trailers, and partnering to increase awareness and engagement in DTE energy-efficiency programs so residents can learn more about reducing energy use.
“While there are many areas to collaborate on with the city, we do have some concerns with two actions out of the 44 in the plan that we want to address,” Decker said.
The first, he said, is community choice aggregation, which could allow the city to buy energy from alternative providers.
“This action would require the state to deregulate electric markets, something that affects all Michigan residents, and is something we do not support,” Decker said. “We believe the city can achieve 100% renewables through other programs.”
State law a hurdle for Ann Arbor’s 100% renewable energy plan
The second concern, Decker said, relates to the city’s call for shifting away from natural gas with building code changes.
Efforts to restrict natural gas usage must take into account the full cost of conversion to other energy sources for residents and businesses, along with an evaluation of the secondary effects to infrastructure, Decker said.
DTE already has programs in place that can help the city toward its goals with customer affordability in mind, he said.
“We look forward to opportunities to collaborate, but we also urge you to avoid approaches that could unnecessarily increase costs,” he told council.
Missy Stults, the city’s sustainability manager, has advocated for community choice aggregation, saying once it’s allowed under state law, any community will be able to do it.
“To achieve our goals of community-wide carbon-neutrality, we need to find solutions that scale,” she said in response to the concerns raised by DTE this week. “Aggregation is one such solution. That said, we are certainly open to other solutions that allow us to get to scale in a cost-effective way.”
Community choice aggregation, if allowed by the state, would be an opt-out program, so local residents and businesses could choose not to participate in the bulk purchase of renewable energy, Stults has explained to council.
But based on what’s happened with such programs in other states, she said previously, “you’re getting electricity at a rate that is generally the same, if not slightly cheaper, than what we already pay from our investor-owned utility.”
As an alternative approach, the city could encourage residents to buy into MIGreenPower, a DTE program that allows customers to offset up to 100% of their energy with wind and solar for a few extra cents per month per kilowatt hour.
As of recently, more than 10,000 households in the region were participating in the MIGreenPower program at varying levels and Pittsfield Township, Ann Arbor’s neighbor, was promoting it to its residents. Stults said the city still has concerns about MIGreenPower and “voluntary green pricing,” so it’s not encouraging people to buy into the program.
“Because these programs require residents and businesses to opt-in, it would be challenging to create a significant impact,” a city A2Zero fact sheet states.
“Current voluntary green power purchase programs charge a premium for electricity, which is not financially feasible to some households nor in line with the cost of electricity for renewable energy,” it continues. “Community choice aggregation uses an opt-out system to combine our collective purchasing power to secure renewable energy at the same or lower rate than we currently pay for electricity, while achieving a significant reduction to our electricity emissions.”
As for concerns it may cost more money for residents and businesses to shift away from natural gas and have all-electric appliances, the city says gas prices are volatile and expected to rise in the future, while prices of renewables are dropping.
A longterm transition away from gas will save money for consumers who no longer want to invest in costly gas infrastructure, the city maintains.
“By pairing electrification with energy-efficiency programs, customers will experience less impact to their monthly bills, as savings from increased energy efficiency can make up for the increased electric load from appliances,” the city states. “Additionally, technologies such as heat pumps provide efficient heating AND cooling, and the operating cost of heat pumps tend to be lower than traditional AC units.”
Though operating costs of gas heating are currently lower than heating with electricity, city officials say that doesn’t count the social cost of carbon emissions, methane leakage that occurs in gas production and distribution and air-quality impacts.
In a news release, city officials said the A2Zero plan outlines “how the entire Ann Arbor community can achieve a just transition to carbon-neutrality,” with a core tenant being social equity, ensuring the concerns of the most vulnerable and traditionally disenfranchised are centered.
“A2Zero will help ensure Ann Arbor remains a world-class city and a leader in climate action and environmental stewardship,” Stults said in a statement.
It’s expected to cost more than $1 billion to implement, though not all of that is expected to be paid by the city.
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