In the fall of 2023, the Michigan Municipal Electric Association (MMEA) approached UFS with a unique and ambitious challenge. Could we help them conduct a study to prove the often-stated anecdotal evidence that public power creates great value for its customers?
Validating the Voice of Michigan Public Power
MMEA is the trade group for municipal electric utilities in Michigan. The state’s 40 municipal utilities are community-owned, non-profit operations spanning small towns to larger cities. They provide approximately 10% of the state’s electricity, and MMEA serves as their collective voice in the state legislature.
While large investor-owned utilities (IOUs) have teams of lobbyists advocating their interests, public power often gets overlooked in policy discussions. MMEA needed a way to demonstrate the economic value and reliability benefits that public power delivers to Michigan communities. They wanted legislators to understand that value and recognize public power as an essential voice in energy policy decisions.
The First-of-Its-Kind Study
When Paul Jakubczak, Utility Director at Coldwater Board of Public Utilities, first proposed a study of state-wide utility value, MMEA Executive Director Katie Abraham called our Vice President, Dawn Lund. They wanted to know what it would take to gather data from their members and create a report demonstrating public power’s value in Michigan.
This project was uncharted territory—the first of its kind. Rather than a typical economic impact study, our goal was to compare public power customers’ experiences against their nearest IOU neighbors, measuring costs and reliability to quantify the hidden value of community-owned power. We wanted to quantify something everyone in public power knew intuitively but had not proven with hard data on such a large scale.
The Method
We reached out to all 40 MMEA member utilities to gather reliability statistics and residential rate information for 2022 and 2023. There was some variety in participation by year and data type, but in total, 33 members provided their data.
Reliability Statistics
Many utilities track the duration of their power outages each year and measure it with the System Average Interruption Duration Index (SAIDI), which shows how long the average customer experiences outages. This is calculated with and without major events (e.g., ice storms), as these extreme events can skew data.
Measuring the impact of reliability is complex. For customers, outages mean spoiled food, lost earning potential for remote workers, frozen pipes or having to install and run a generator. For businesses, outages can cost thousands of dollars per hour in lost productivity and sales.
To measure the cost of these reliability figures, we selected a tool called the Interruption Cost Estimate (ICE) Calculator developed by Lawrence Berkeley National Laboratory. This is the same tool that national IOUs use to evaluate reliability investments. We compared the reliability statistics with those of neighboring IOUs to help determine the difference in the financial cost of disruption.
Rate Data
In addition to differences in costs related to reliability, we also analyzed electric rate data from participating utilities. Comparing their residential rates to those of the nearest IOU highlighted the direct savings public power residential customers receive.
The Impact
The analysis revealed that Michigan public power saved customers a cumulative $402,555,655 in 2023.
Better Reliability = Substantial Savings
When including major events, public power customers saved an average of $1,335 in 2023. They had an average of 677 more minutes of power per outage. The reliability accounted for approximately 85.05% of the total public power savings.
Significantly Lower Rates
Also in 2023, public power customers enjoyed an average electric bill that was 22% lower than those of the IOUs, with residential customers saving on average $272 each and $60,269,995 cumulatively.
A Data-Backed, Unified Voice
The 33 member utilities that participated represent about 82.5% of public power customers across Michigan. The figures from this study only represent the utilities that responded to our request for data.
Our study provided MMEA with quantifiable, defensible data to create a clear understanding and support advocacy efforts. For the first time, Michigan’s public power sector has data-backed, statewide estimates of its value, transforming decades of anecdotal knowledge into a powerful tool in legislative discussions. When public power has a seat at the table, it can effectively advocate for the interests of the communities it serves.