Group Says Ann Arbor, Mich., Municipalization Study RFP Falls Short

by Paul Ciampoli
APPA News Director
June 6, 2022

A group that supports municipalization efforts in Ann Arbor, Mich., recently said that a request for proposals (RFP) for a municipalization feasibility study falls short on several fronts.

In January, the Ann Arbor City Council took action to require the completion of a municipal electric utility feasibility study. In response, city staff recently issued an RFP.

In response to the RFP, Ann Arbor for Public Power (A2P2) noted that it supports a thorough and unbiased municipalization feasibility study. “However, this RFP is flawed, and could lead to a study that does not provide the information to accurately determine the technical and economic feasibility of an Ann Arbor municipal electric utility,” the group said.

“We are disappointed that the city rejected our requests to provide public comment prior to the release of this RFP, which could have prevented these flaws,” the group said.

To ensure the completion of a reliable feasibility study, it asked that an A2P2 representative be appointed to the proposal selection committee as an external collaborator, and that the proposal selection process be conducted with public transparency. The group wants its representative to be present at contractor interviews (if needed), at negotiations, and at selection committee meetings.

A2P2 said that the city must thoroughly evaluate both the potential costs and the potential benefits of municipalization to determine feasibility.

The group said that this task is typically performed in two steps. The first phase typically takes a modeling approach, based mainly on Federal Energy Regulatory Commission and state regulatory filings, presenting various scenarios to determine if a more rigorous follow up engineering-based study justifies the added expense, it said.

A2P2 noted that it advocated for an affordable preliminary feasibility study similar to those recently conducted by Pueblo, Colorado and Chicago, Illinois, each of which cost about $120,000.

“The scope of work of section 2 of this RFP is so extensive that we expect bids for this portion alone to come in many times higher.” The city has allocated $250,000 for the RFP, and the group believes that this funding amount will still be severely inadequate to fund the scope of work.

In addition, A2P2 said that the RFP requires exhaustive evaluations of the costs, concerns and risks of municipalization without a correspondingly complete assessment of its potential benefits.

The group quoted Ursula Schryver, American Public Power Association Vice President of Strategic Member Engagement & Education, as saying that overall, “it seems a bit biased negatively toward the municipalization option.”

She also noted that the RFP deliverables should have included estimates of municipal benefits, such as the potential value to the city of owning the distribution assets. These might include the ability to improve service reliability, to generate cash reserves, and the potential to improve overall city services by integrating the electric utility.

The group noted that more than 1,300 Ann Arbor residents signed petitions supporting a city-funded feasibility study, “and they deserve an efficiently conducted study that delivers a sound, unbiased answer. Tax dollars should be spent on a fiscally responsible and open feasibility study process, one that reliably evaluates the municipalization option.”