Two citizen-led ballot initiatives seek to rein in Michigan’s powerful electric utilities as residents say politicians have failed to address pressing issues around controversial datacenters, high energy rates and poor electric reliability.

On Tuesday, voters statewide will consider a nation-leading ban on political donations by the state’s deeply unpopular regulated utilities. At the same time, organizers in Ann Arbor, one the state’s largest cities, are proposing to banish utility giant DTE Energy by municipalizing the grid. It would establish a public power company to deliver energy.

The two initiatives are not coordinated, but are borne out of increasing frustration over energy delivery and datacenters. The citizen-led campaigns represent test cases that could help gauge the US public’s appetite for structural change in the nation’s politically powerful utility industry, and what is legally possible, organizers say.

DTE and Consumers Energy are among the nation’s largest utilities, and serve about 80% of Michigan’s customers. They have supported dark money non-profits, Pacs and front groups to attack the proposals, while their allies among city of Ann Arbor leadership have filed a last minute lawsuit to stop the public power initiative.

If voters approve either proposal, a bitter legal fight is virtually guaranteed. The utility-aligned group opposing the political spending ban, Protect MI Free Speech, has claimed the initiative violates free speech protections under the Citizens United ruling that struck down limits on companies’ donations to candidates. But the proposal’s architects say they have figured out a way around Citizens United.

Regardless, the initiatives underscore the broader, growing discontent with many of the nation’s large utilities, said Karlee Weinmann, a researcher with the utility industry watchdog, Energy and Policy Institute.

“What we’re seeing on a number of levels is the utilities’ political influence operations begin to break down under the weight of this public outrage over high bills, poor service, and lack of accountability, and I think both initiatives are reflective of that in their own ways,” Weinmann said.

Michigan consistently ranks among the nation’s worst in terms of frequency and length of outages, federal data shows. Each year, DTE and Consumers propose steep rate hikes, and they ally themselves with unpopular datacenters because the energy-hungry facilities demand fossil fuel resources that are profitable to utilities.

The problems in Michigan “are a microcosm of the nation”, said Christy McGillivray, the Michiganders for Money Out of Politics executive board co-chair. She said voters understand that political spending is a root cause of the problems – 93% of legislators took utility industry money in a recent session.

Optimism is high as the Ann Arbor public power initiative appears to have momentum, and recent polling found broad bi-partisan support statewide for the political spending ban, with 71% of respondents backing it.

“There’s so much energy and momentum behind this,” McGillivray said. “Pay-to-play politics keeps elected officials from actually tackling what voters really want, which is real solutions to the cost of living and utility bills, and they won’t if utilities keep bankrolling their campaigns.”State Proposition 2 would prohibit regulated gas and electric utilities, or companies with more than $250,000 in government contracts, from making political contributions. It would also block executives and their immediate family members, as well as other people with close connections to the companies, from making donations.

In Ann Arbor, Proposal E would establish a new board to direct and manage the establishment of a city-owned electric utility. That utility, after a second vote, would replace DTE Energy as the city’s electric supplier.

Brian Geiringer, the executive director of Ann Arbor for Public Power, said that DTE is unpopular in Ann Arbor because of, among other reasons, the unreliable service, general resistance to clean energy and a lack of accountability. The appeal in the public utility model lies in the direct, democratic control over an essential service, he said. “The question of whether a private, shareholder corporation or publicly owned entity that you’re a part of is in control of your electricity – that is an extremely poignant question at this moment,” Gerringer said.

In a statement to the Guardian, Katie Carey, a Consumers Energy spokesperson, noted that the campaign against utility spending and their environmental nonprofit allies, also take dark money.

The proposal “won’t eliminate money in politics – it will simply shift influence away from Michigan companies and toward wealthy national donors and special interests, similar to the dark money funders of their ballot proposal”, Carey wrote. “Meanwhile, local employers and their employees risk being sidelined.”

DTE and Protect MI Vote, its affiliated anti-Proposal 2 group, did not respond to requests for comment. But Protect MI Vote told the Detroit News: “This is not over on November 3. We believe … this is going to go on for years. And it’s going to cost a lot of money to protect people’s first amendment freedoms.”A confluence of frustrations DTE and Consumers are “regulated monopolies” with full control over their service territories, but their broad level business decisions, such as rate increases, decisions about grid maintenance and clean energy plans, must be approved by state regulators.

Consumer advocacy groups allege that the Michigan public services commission, which regulates the utilities and is led by governor appointees, has largely allowed the companies to prioritize shareholder and industry interests over residential customers’ needs.

DTE for decades failed to adequately keep up with replacing ageing equipment, tree trimming maintenance and other grid maintenance, industry experts have said. That left the grid vulnerable to strong storms.

Many of the problems originated under GOP leadership, and in 2023 Democrats took full control of the state government for the first time in 40 years, ushering in new hope that the party would rein in the utilities. That did not happen.

GretchenWhitmer, the state governor, and Democratic leadership received huge amounts of donations from DTE and Consumers, and every piece of legislation opposed by the utilities died.

The legal battles ahead In Ann Arbor, the city has for nearly a decade opposed the public power proposal, and instead implemented a Sustainable Energy Utility (SEU). It allows the city residents to generate rooftop solar or community clean energy. But DTE still owns and maintains the grid and sets the rates, which public power advocates say are main problems.

The city also installed a former DTE executive to run the SEU, which drew questions from clean energy advocates. The city’s lawsuit filed this week claims that Ann Arbor for Public Power has proposed a city charter amendment, when a new utility actually requires a full charter revision.

“We must be winning,” Gerringer told local media when he learned of the lawsuit. He said that Michigan’s attorney general has already found that their proposal only requires a charter amendment, not a full revision.

Meanwhile, the ban on utility political spending was intentionally designed to survive a legal challenge that invokes Citizens United. It is modeled after state laws elsewhere that prohibit companies that have government contracts, or which work closely with governments, from making political contributions. Instead of singling out utilities, the new proposal targets all companies with at least $250,000 in state contracts.