- State energy regulators are reviewing DTE Energy’s proposal to build the state’s first hyperscale data center to power one million homes.
- DTE seeks quick approval before year’s end, with limited public scrutiny
- AG Dana Nessel and others are pushing for a deeper review, citing fears that a bad contract could raise energy bills, harm the environment
As DTE Energy pushes for faster approval of its plan to power Michigan’s first hyperscale data center, Attorney General Dana Nessel and other utility watchdogs are criticizing state energy regulators’ handling of the massive contract.
Citing “unprecedented political and industry pressure” to “overturn” approval for a proposed artificial intelligence data center in Saline Township, Nessel said during a press conference Tuesday that he feared regulators would “rubber stamp” the contract without adequate scrutiny.
“This appears to be a rush job,” Nessel said. “It appears as if the Public Service Commission intends to rubber-stamp whatever DTE wants, as I have no other explanation as to why they would not hold a contested hearing.”
The controversy stems from an announcement last month that tech companies Oracle, OpenAI and Related Digital are planning to build a $7 billion AI data center on farmland south of Ann Arbor. Now, DTE wants the Michigan Public Service Commission to approve contracts to power the 1.4 gigawatt facility before the end of the year, without any formal public scrutiny.
Michigan Public Service Commission officials have not responded to the request for expedited approval. Last week, he announced a Dec. 3 hearing to gather public comments on the proposal. Members of the public may also submit written comments.
Arguing that this is not enough, several groups have petitioned the MPSC to open a so-called contested case, a process overseen by an administrative law judge that typically involves discovery, cross-examination and a formal hearing.
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“This is a precedent-setting decision for the future of data centers and AI development in Michigan,” said state Rep. Morgan Foreman, D-Pittsfield Township. “If we allow a utility to bypass public engagement. We’ve opened the door for that to happen again, and again, and again.”
Commission spokesman Matt Helms declined to comment on the open case.
A ‘tight timeline’
The proposed contract would have a windfall for DTE, allowing it to benefit from an investment of several hundred million dollars in the infrastructure needed to meet the power demand of an energy-hungry data center equivalent to 1 million homes. Project supporters also tout the potential for hundreds of jobs and millions in annual tax revenue. Project supporter Gov. Gretchen Whitmer has called it “the largest economic project in Michigan history.”
DTE officials argue that speed is of paramount importance otherwise the technology companies will cancel the project.
“The concern is with the very limited timeline for construction of this project,” DTE Director of Policy and External Affairs Dan Mahoney told the Saline City Council earlier this month. “And if we are unable to meet those schedules, it is likely that Oracle will select a different site in a different state.”
But critics fear that DTE — which serves 2.2 million customers in southeast Michigan and has come under repeated criticism for high rates, frequent outages and aggressive political spending aimed at ensuring political support for its priorities — could use the contract to raise rates even higher.
State law requires data centers to pay for system upgrades for their service so that residential ratepayers do not subsidize the industry. DTE officials argue that their proposed contract meets that requirement and then some.
But ratepayer advocates argue that the company’s heavily redacted filings with the MPSC make that claim impossible to verify.
“It’s hard to know what’s missing from a contract when we can’t actually see it,” said Amy Bandik, executive director of the nonprofit Citizens Utility Board.
The debate over this data center contract is unlikely to be the last. Tech companies have approached at least 10 Michigan communities with data center proposals in various stages of development, sparking concerns about land, water and energy use and complaints about rushed and secret deals.
Developers often quietly secure land and power before publicly announcing their plans. In some cases, they have asked local officials to sign non-disclosure agreements. And the technology companies behind the proposals are keeping their identities secret until negotiations are complete.
environmental concerns
Data center opponents say the privacy only increases their concerns about the facilities’ impact on ratepayers and the environment.
Hyperscale data centers span hundreds of acres. Depending on how they are built, they may use large amounts of water to cool the servers. And they use huge amounts of energy, raising questions about whether utilities can deliver without increasing costs to other customers or increasing the use of fossil fuels that cause climate change.
Studies in other data center-heavy areas have produced mixed results, with load growth caused by data centers increasing rates in some cases and helping to keep rates low in others. The outcome in Michigan will depend largely on how power contracts are structured.
In some states, heavy energy demand from facilities has prompted utilities to keep coal plants running past their planned retirement dates or plan new gas plants.
Michigan law requires data centers to source clean energy to meet 90% of their needs and requires utilities to transition entirely to clean energy by 2040. DTE officials have said they can meet those requirements, but have declined to elaborate on their plans to do so.
“We would like to see a commitment on the part of data centers to build and pay for renewable energy to power their operations,” said Charlotte Jemison, chief policy officer of the Michigan Environment Council. “If they want to be good corporate citizens in Michigan, they have to be part of helping us meet our climate goals.”
The MPSC’s next meeting is Dec. 5 at 1 p.m. If commissioners choose not to open the disputed case for review of the DTE contract, the other parties can appeal the decision to the Michigan Court of Appeals.
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