ABOUT DR. MISSY STULTS:
Dr. Missy Stults is the Sustainability and Innovations Director for the City of Ann Arbor. In this role, she works with all city operations, residents, businesses, the University of Michigan, nonprofits, and others to achieve a just transition to community-wide carbon neutrality by 2030, as outlined in the A2ZERO Carbon Neutrality Plan.
Prior to joining the city, Missy worked with cities and tribal communities around the nation to advance their climate and sustainability goals, including during her time as the Climate Director at ICLEI-Local Governments for Sustainability and as a consultant to philanthropic organizations.
Missy has a PhD in urban resilience from the University of Michigan, a Masters in Climate and Society from Columbia University, and undergraduate degrees in Marine Biology and Environmental Science from the University of New England.
ABOUT LISA WOZNIAK:
Lisa’s career spans over two decades of environmental and conservation advocacy in the political arena. She is a nationally- recognized expert in non-profit growth and management and a leader in Great Lakes protections. Lisa is a three-time graduate from the University of Michigan, with a bachelor's degree and two ensuing master's degrees in social work and Education.
Lisa serves a co-host and content partner in 89.1 WEMU's '1st Friday Focus on the Environment.'
RESOURCES:
Michigan League of Conservation Voters
Ann Arbor Office of Sustainability & Innovations
Ann Arbor Sustainable Energy Utility (SEU)
TRANSCRIPTION:
David Fair: This is 89 one WEMU, and I'm David Fair. And welcome to the November edition of our monthly conversation series, First Friday Focus on the Environment. Now, a lot of absentee ballots have already been cast early. In-person voting ends on Sunday, and then it's final decision day next Tuesday, November 5th. In Ann Arbor, voters are being asked to decide whether to create a municipally owned, sustainable energy utility or SEU. It aims to advance the city's goal of increasing reliance on renewable sources of energy and achieving its carbon neutrality goals. This ballot issue is the focus of our First Friday conversation today. My co-host and content partner is Lisa Wozniak. She serves as executive director of the Michigan League of Conservation Voters. And happy election season!
Lisa Wozniak: Oh, and to you, too, Dave! There's nothing like local, state and national elections to offer up a little pre-holiday season stress.
David Fair: Boy, do you have that right! Exactly!
Lisa Wozniak: So, this sustainable energy utility, or SEU, as you said, question appears on the Ann Arbor ballots as Proposal A. And there are still plenty of votes to be cast that will help decide whether this passes or fails. We wanted to learn more about what publicly owned and operated utilities are all about and what it might be able to accomplish in terms of energy, reliability, energy, environmental sustainability and in advancing Ann Arbor's ambitious carbon neutrality goals. And that's why we have invited Missy Stults to join us today. Missy is Ann Arbor's Director of Sustainability and Innovations, and we really appreciate your time with us today!
David Fair: Indeed, we do!
Dr. Missy Stults: Oh my goodness! It's always such a pleasure to be here! Thanks for the opportunity!
David Fair: Well, I have been made aware by a number of folks, Missy, in the community that there is some confusion over what exactly approval of this proposal would accomplish. Some are under the impression this measure would fully replace service from the investor-owned utilities and DTE. And have you heard some of that same kind of conversation?
Dr. Missy Stults: Yeah, we have. And it's not. Actually, I think that's the most common question we get is, is this a total takeover? Does this require us to purchase DTE's assets? And the answer is, no, it doesn't. This is a supplemental utility that's explicitly focused on providing optional so it's opt-in--no one has to take service--clean energy services from things like local solar and battery storage systems, network, geothermal. And, really, I think Lisa kind of hit at this in the intro. We thought of this idea of focusing on the pain points that Ann Arbor has experienced. And that's not super reliable, resilient, clean power. And the SEU focuses on those three things explicitly, while also centering affordability in the narrative.
Lisa Wozniak: So, as you said, Missy, Proposal A in Ann Arbor would be an opt-in service for city residents. What level of opt-in from the community will be required to make this feasible long-term?
Dr. Missy Stults: Yeah. So, that's a great question. And in fact, everything I'm going to share is on our website if folks want to dive in deeper. So, as we were exploring the SEU, one of the final steps we did before we went to the voters was a rate analysis. So, we wanted to ensure that not only could we do this technically, which the answer is of course we can. That's been proven. But we wanted to understand economically, would this actually work? And the rate analysis shows there's two critical variables that have to be hit in order for us to actually launch that the SEU if it's authorized by the voters. Number one is scale. So, we have to get 20 megawatts of subscription. Now, the subscriptions we wouldn't launch until we got that point unless the second variable comes into play. But let's just focus on that. That could come from one subscriber, right? The University of Michigan could sign up as a large subscriber. Or it could be five large commercial subscribers. That would be all it would take. Or it could be hundreds of smaller residential systems. But you need 20 megawatts. And the reason is you have startup costs. You have to have a billing system. You have to have customer service. And so, you need enough generation to be able to cover the cost per kilowatt hour of usage. So, that's a key variable. The second key variable is the cost of capital. Of course, we have to buy the solar panels. We have to buy the pipes for the network geothermal. We have to buy the batteries. And so, if you get your cost of capital cheaper, the rates are lower. And so, this idea of scale and the cost of capital are in conversation with each other, which is why I've actually been spending a lot of time doing some fundraising on the front end in case this does pass, because that'll help us launch the SEU quicker than at the 20 megawatt point, if we can get the grant, for example, as opposed to having to take on debt to launch the system.
David Fair: Well, no new taxes would be involved, but there would be service fees for users of the service, as you've pointed out. So, should this pass, and it launches, what impact do you anticipate it would have on a household's bottom line? Everybody is concerned about cost these days.
Dr. Missy Stults: Yeah, yeah. Well, pretty exciting! Our modeling shows it's cheaper than what people pay today. So, you would be able to subscribe for the solar option, assuming that your home or your business or your house of worship is eligible for solar, like if you have a good roof and you got some sun potential. We're modeling that we can come in no higher than $0.16 per kilowatt hour. So, you would pay your bill like you do today for every unit of energy that you're using on site. And that's actually lower than what folks are paying from our investor owned utility. And then, we model battery storage, which helps us get that resilience--so having solar and storage. And that does come in at a premium from what you pay today. But it is cheaper than purchasing a generator and maintaining that generator over its life. So, it actually leads to savings and provide more resilient and reliable power than a generator would by itself. So, there's different scenarios here. You have to compare things--kind of apples to apples--of what we're doing here. But short story is the first offering--that solar offering we envision in the SEU--actually will save households money.
David Fair: This is 89 one WEMU's First Friday Focus on the Environment. We're talking with Ann Arbor Director of Sustainability and Innovation Missy Stults about Proposal A. It would create a sustainable energy utility in the city if approved. The other voice you hear today is that of my First Friday co-host, Lisa Wozniak. She's executive director of the Michigan League of Conservation Voters.
Lisa Wozniak: So many people have been upset about the number of power outages and the length of those outages while DTE energy rates continue to go up. And you've mentioned reliability. I wish you could dig in a little bit more on that as it pertains to the SEU and how this actually addresses the reliability issue.
Dr. Missy Stults: Thanks for the question, Lisa. I often talk to people about this from kind of a lived experience. So, I happen to live in a house where we invested in solar and an energy storage battery system. So, it's true. We lose power quite frequently in Ann Arbor. In our case in our neighborhood, when that centralized grid fails us, that is there's a storm that moves through or an animal chews through a wire or whatever it is that kind of takes place. Whenever the system goes down, what's nice about having solar in storage, in my particular case, is that we still have power because that solar is still shining. It's powering the solar panels. We have our battery system that's providing energy that is a resilient, reliable source of energy. So, literally, my neighborhood might be all out, but we're still okay and we're still functioning. The SEU envisions that exact same model for many more residents and businesses. The difference between what I just described and what the SEU would do is my family had to purchase those panels. We were lucky enough. We had enough income that we could do that. We paid that capital upfront. We took out a small loan. We've been paying that back. It's now paid off. We own that system. But many people can't afford that upfront capital. Many people don't have a credit score that allows them to access traditional capital markets. So, the SEU circumvents that. The SEU owns those systems. The SEU puts that capital out at the beginning. You just pay for the energy that you use through that system. So, this allows you to have resilient, reliable, clean power that's local. It's not coming in from anywhere else, and it allows you to participate in the clean energy economy without having to go through traditional markets, which left many people out of the conversation.
David Fair: You can find SEU's and public utilities all across the country and some right here in Michigan. The biggest is the Great Lakes Energy Co-op. It serves about 130,000 customers in 26 counties in western and northern Michigan. There, of course, is the Lansing Board of Water and Light, which serves about 100,000 customers. Here in Washtenaw County, Chelsea runs its own utility. How much time did city staff spend talking and learning from these kinds of entities that are already succeeding in this arena before determining it was a wise idea to put Proposal A before voters?
Dr. Missy Stults: A lot. And I do want to clarify one thing. There are actually only two other sustainable energy utilities that exist in the country. There's Washington, D.C., and there's Delaware. But they look quite different than what we're talking about now. Now, there are thousands of municipal utilities--kind of traditional municipal utilities--that exist. And so we have talked to folks like Chelsea and Lansing to understand how they're functioning. Holland is actually one we spent a lot of time with, understanding things like their on-bill finance programming or their energy efficiency programming. And so, we've taken lots and lots of data under kind of advisement and analysis to figure out what is it we're really focusing on. And you named it at the beginning. In our audacious climate goal, we also have these challenges with resilience and reliability. And so, buying existing grid doesn't improve reliability, right? Buying the existing grid gives us a chance to make investments in that grid. But that's not fixing the problem on day one. So, we've really, really focused on what is it we need to do to fix the problems or to seize the opportunities in our uniquely spaces. We have aggressive clean energy goals. Let's start generating clean energy in our community. So, let's invest in that solar and geothermal. We've got an unreliable system. Let's start investing in things that will help us improve reliability, like storage for neighborhood microgrids, so that we're still taken care of. We've really kind of leapfrogged a lot of the existing utility models to say what is our strategic opportunity. What are our pain points that we need to address? And let's not be beholden to a system that may not be working really well. Let's create the system we want. And that's how we got to an SEU.
Lisa Wozniak: So, in these conversations with other entities, what determinations did you, the City of Ann Arbor, come to, as far as cost of upfront infrastructure investment and the cost of full and part-time staffing needed to run and service this system?
Dr. Missy Stults: The sustainable energy utility, in particular, Lisa?
Lisa Wozniak: Yes.
Dr. Missy Stults: Yeah, that's great. So, it's actually kind of kind of exciting in many ways. For those who know Ann Arbor, we already run utilities. We already run a water utility, a water recovery utility, a stormwater utility. And so, we know how to run utilities. Now, of course, we need to have an executive director of the Sustainable Energy Utility. There needs to be community engagement folks. Obviously, I often describe this as nothing individually that the sustainable energy utility is proposing to do is unique. What's unique is we're proposing to do all of it. So, someone has to be out talking to the community, really helping them understand, making sure what Lisa's package looks like is different than what Dave's package looks like because your homes aren't the same. And you need different things. So, we anticipate that staffing may be something in the early days, 2 to 4 people, and then grow to probably a stable office, something like 8 to 10, with a lot of contract labor helping us actually do the installations. Solar panels don't need a lot, for example, once they're installed. So, we wouldn't have most likely contract or we wouldn't have staff that do solar installations. We would work with our local marketplace, right? We'd work with our local employers to create more jobs installing solar in the community and maintaining our system. So, that's sort of the model that we've been working on for staffing and support to launch.
David Fair: So, if Proposal A is passed by Ann Arbor voters, you don't start necessarily totally at ground zero, but there is a big ramp-up. What is the process and timeline for moving from voter approval to functional, full service, publicly owned utility?
Dr. Missy Stults: It's a great question, and I try to actually manage expectations when I talk to people about this, too. That if everything goes swimmingly well, meaning residents sign up, they're excited about the utility, we don't have supply chain disruptions, we're talking 18 to 24 months from when we're actually putting solar right on roofs, when we're actually installing battery systems in homes. So, it is a ramp-up for sure, and it could potentially go a little faster if we have a lot of excitement. We do have a waitlist that's open right now. We opened it a few weeks ago just to start understanding what demand looks like should this pass. But that's really a critical piece. We need to get enough people interested to subscribe from day one, so that we could in fact go buy all the capital, do that kind of capital outlay we need to to launch. But generally, I'm telling people 18 to 24 months is more realistic of when they'll actually see the utility.
David Fair: Our look at Proposal A in Ann Arbor continues on WEMU's first Friday Focus on the Environment. I'm alongside Lisa Wozniak of the Michigan League of Conservation Voters, and our guest is Ann Arbor Director of Sustainability and Innovations, Missy Stults.
Lisa Wozniak: And, Missy, to follow up on Dave's question, how would this system be developed to allow for growth and expansion from its initial phase?
Dr. Missy Stults: Yeah. So, the way we thought about this is phase one is what's known as behind the meter system or sort of individual system. So, you could imagine a local business, a school, your neighbor, maybe your house, kind of distributed throughout the community, right? So, you're getting solar. You're getting storage. We're doing individual systems. The way it grows, though, and this is sort of phase two, is once you have a density of subscribers to the system is it's in that geography. So now, imagine. You look down your street and imagine of the ten houses on your street, eight of them are subscribing to the SEU for some service. Once you get to that point, you can start doing things like networked geothermal. That could come into play, right? So, we could talk about transitioning your heating and cooling systems in your home to something that stays comfortable and more affordable. We could talk about a microgrid. So, let's just pretend we said you and I are neighbors and I have a glorious roof that happens to be two stories and gets a lot of sun, and you have these beautiful trees that provide crazy value for our community. But your roof isn't going to be viable for solar. Well, now we can start microgrids, meaning that I'm generating more energy than I need, and I'm literally sharing it through a small scale SEU wire to your house. And so, we're both subscribed. But that can't happen, that kind of power sharing, until you have a density of subscribers in a small geographical footprint. So, that's kind of phase two that we think about and the speed with which we get to phase two will depend on adoption. But I guess, to your point, this allows you to scale up and down as necessary throughout.
David Fair: So, once again, if voters offer approval on November 5th, what level of contribution would it make towards the overall A2Zero plan in becoming carbon neutral by the year 2030?
Dr. Missy Stults: Well, you can make a pretty big dent potentially here if we think about it. I know our goal is 2030, and we are working tirelessly to hit that. We also know that, around 2030, we will still have emissions in the community that we will have to transition. Think an internal combustion engine car that someone just recently bought? That's not going to go away. And every gas station isn't going to go away. And every furnace and every water heater isn't going to be gone by 2030 or transitioned to allelectric. So, we know we still have work to do. What the SEU allows us to do is to start pretty immediately tackling what I'll call the low hanging fruit--getting solar and energy efficiency done. It also gives us the vantage to be able to think about a fundamental transition in how we heat and cool our homes, our businesses, our recreational sites, etc.--transitioning that to network, geothermal. So, our analysis shows if you just look at solar alone, we can generate about if we use every viable roof, which won't happen. But just to give you a number here. We could generate within the City of Ann Arbor about 400 megawatts of energy. To give you a sense, we use somewhere between 440 and 480 megawatts of electricity a year. So, pretty significant! And we're doing a study right now to understand heating and cooling and the geothermal potential. So then, I can tell you how much are we using in terms of fossil gas and how much of that could be offset with a geothermal system. I don't have the answer yet, but we're working on an analysis right now to be able to tell you precisely what we think the SEU's potential is.
Lisa Wozniak: And conversely, Missy, what are the ramifications on the A2Zero plan should the measure fail?
Dr. Missy Stults: You know, that's okay. It is what it is. Our office has to have contingency plans for everything we do. And we do. We have lots of contingencies. We're thinking about strategies to scale up solarize programs, which has helped about 5% of residential, single-family homes in Ann Arbor get solar. That's a crazy number! That's a we're almost at 5%. That's higher than New England adoption rates of renewable energy. We're chasing California down. So, we think about more and more ways to help incentivize people to make the transition themselves. We're thinking about starting things like a loan loss reserve to take risk out of the marketplace, so more and more people have access to those capital markets that right now shut them out. We have lots of contingencies. We thought about a virtual power purchase agreement that we could do to instigate 400 more megawatts of new renewable energy here somewhere in Michigan--you can't see me doing air quotes. Ann Arbor is renewable energy that we're paying for and we're helping to bring online. We do regulatory interventions to try to move this. All of this is still in play because we can't just put all of our eggs in one basket. We've got to be working on all of these things. You know, it'll take me 24 hours to pick myself back up, and then I got to get right back to work.
David Fair: Well, thank you for spending the time with us and offering all the information, Missy! I appreciate it! Missy Stults, discussing proposal on the Ann Arbor ballot that would create a publicly owned sustainable energy utility in the city. Missy is Ann Arbor's Director of Sustainability and Innovations and has been our guest on WEMU's First Friday Focus on the Environment. My partner is Lisa Wozniak. She's the executive director of the Michigan League of Conservation Voters. And, Lisa, we'll do it one more time in 2024! We'll see you in December!
Lisa Wozniak: I look forward to it, David!
David Fair: I'm David Fair, and for more information on Proposal A in Ann Arbor and more election news from around Washtenaw County, pay a visit to our website at wemu.org. This is your community NPR station, 89 one WEMU FM, Ypsilanti.
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