Michigan Utilities Clash with Attorney General Over Data Center Energy Projects

Michigan’s biggest power utilities are at odds with the state’s attorney general over regulatory protections and transparency around future data center energy projects.

Attorney General Dana Nessel has filed a petition and other documents asking the Michigan Public Service Commission (MPSC) to rethink its November order setting up customer safeguards for energy-intensive businesses such as data centers.

“Reducing electric bills and making energy affordable is essential,” Nessel said as quoted on her government website about the notice of intervention in the case to bring 1.4 GW of data center capacity to Michigan. “That’s why I’m asking the commission to hold a public hearing on this case – to make sure DTE customers are not stuck footing the bill for a data center that never comes to fruition or uses far less electricity than projected. In either scenario, the massive costs of building the data center won't just disappear. The costs would be passed on to ratepayers, driving up bills for families.”

The AG’s intervention is focused on utility DTE Energy (once known as Detroit Edison). Another large Michigan utility company, Consumers Energy, is contesting the same notice of intervention and alleging that Nessel’s actions are without merit and could unnecessarily hurt investment, tax revenue and jobs bringing the growing data center sector into that state.

"It is unfortunate the Attorney General is taking an anti-investment position to oppose economic growth opportunities these customers will create," said Lauren Snyder, Consumers Energy's senior vice president and chief customer and growth officer, in a statement. "When businesses grow, families have more choices -- better jobs, stronger schools, and thriving communities where people want to live and stay."

Consumers Energy is Michigan’s largest electricity utility, serving close to 7 million customers. The utility plans to file an updated energy supply plan next year, utilizing numerous resources to meet future electricity generation needs, including natural gas, renewable energy and battery storage.

"The attorney general's challenge has no merit," said Kelly Hall, Consumers Energy's senior vice president of regulatory and legal affairs. "The MPSC's order last month created a useful framework as Michigan grows and attracts new jobs and tax revenue for local communities."

Under the new MPSC order, Consumers Energy's tariff for data centers and other large-load users would apply to any customer that uses at least 100 MW. Consumers Energy today has only one customer larger than 100 MW, which it serves under a special rate established by the Michigan state Legislature.

The planned 1.4 GW of data center capacity would be built near Saline, Michigan. Green Chile Ventures LLC, a subsidiary of software giant Oracle Corp., is listed as the data center customer.

The attorney general pressed on earlier this month, noting that the commission approval didn’t merit a public hearing.

“DTE continues to push for a rubber-stamp approval of a secret deal, but time and again, my office has contested their filings – and time after time, the utility has shown it is not a trustworthy partner, routinely filling cases with unjustified costs,” Nessel said. “We must be able to scrutinize DTE's ability to sell this massive amount of electricity without negatively impacting residents. No matter how DTE tries to explain it away, this case – involving hundreds of millions of dollars in costs just to connect the data center to DTE’s power grid – should be treated as contested like any other, and their customers have made it overwhelmingly clear that they too want full public hearings.” 

The rise of artificial intelligence training needs and cloud-based computing—both predicted to more than double their current energy demand in the next few years, is creating a rush to expand capacity by power utilities, data center developers and digital infrastructure technology firms alike. Some forecasts predict an added 125 GW and more in new data center demand by the early 2030s.

At the same time, this collision of higher energy demand and constricted supply represents a danger in affordability for residential customers, some say. At last month’s Schneider Electric Innovation Summit in Las Vegas, former Federal Energy Regulatory Commission Chair Mark Christie warned that the electricity load is growing five to six times faster than commissioning of new generation capacity.

“We are sitting on a volcano,” Christie said during the second day Innovation Summit keynote at the Fountainebleau resort, quoting an old line by French writer Alexis de Tocqueville about his country on the brink of a revolution. He worries that the same thing could happen if America doesn’t get a handle on how to adequately power energy-hungry AI and a growing population.

“The political volcano could be from energy prices, and we’ve got to address that,” Christie added. “We cannot forget that what retail customers are paying is going to be a huge part of it. If we don't, the volcano could blow up, and it could be bad.”