Michigan energy regulators conditionally approved a request Thursday to fast-track approval of contracts to power a planned data center near Ann Arbor.
Utility company DTE Electric argued it needed quick approval to move forward with the energy-intensive project connected to tech companies OpenAI and Oracle.
Thursday’s decision takes advantage of a policy that allows ex parte proceedings for projects to skip a deeper review, known as a contested case, if they won’t raise rates for other customers.
Michigan Public Service Commission chair Dan Scripps said contracts put the project on the hook for billions of dollars, regardless of if it pans out.
“This provides real protections that don’t exist in many other states to ensure that, if ultimately, this is a bubble, if this is all overblown and that the load doesn’t materialize, that again, even in that worst case scenario, customers are still protected,” Scripps said.
DTE would need to expand its energy capacity by a quarter for the data center. The project would require 1.4 gigawatts of energy, more than an average nuclear reactor produces, according to U.S. Department of Energy estimates.
In an emailed statement, DTE welcomed the decision.
“These contracts protect our customers — including ensuring that there will be no stranded assets — while enabling Michigan's growth. DTE Energy has an obligation to serve any customer, including data centers, that come into our electric service territory in southeast Michigan. That’s why we’ve been so focused on making sure our broader customer base is protected with these contracts to ensure they will not subsidize data center rates. We acknowledge there’s a range of viewpoints and emotions about this decision. We remain deeply committed to supporting our customers and the communities we serve by delivering the safe, reliable energy they depend on each day,” DTE spokesperson Ryan Lowry said.
Opponents say they don’t trust that ratepayers won’t be left holding the bill.
York Township resident Sarah Brabbs said no one has fully explained how the project will be held accountable.
“Who determined if that’s there. Is that there? We don’t know. But if it is, we don’t know who determined what it looks like. We don’t know who’s in charge of it. If it’s part of the dealmakers or is it someone else? What does that look like? How are you testing and making sure that they do what they say?” Brabbs said.
During the Public Service Commission meeting, attendees frequently heckled commission members.
The vote faced massive backlash as opponents took issue over both environmental concerns and because the plan skipped the reviews that would’ve been part of a contested case.
State Rep. Morgan Foreman (D-Pittsfield Twp.), who represents the area, said she was disappointed with the decision.
“I have said from the beginning that approving these contracts without full transparency would set a dangerous precedent. This is not 'doing business with' a community, which implies a mutual and reciprocal relationship with residents and neighbors; it is forcing themselves onto us, without discussion or review,” Foreman said in a press release.
Local resident Beth Foley said it was worth a deeper look.
“There is potential for egregious harm by fast tracking this with no downside in taking your time and ensuring you got it right,” she said.
The MPSC insists it did conduct a thorough review. Scripps and other commissioners walked through what they say are safeguards in the contracts.
They said the deal would require the data center operators to purchase energy for at least 19 years. If they try to back out early, they’d still have to cover at least 80 percent, if not more, if they used a higher percentage of energy.
Commissioner Katherine Peretick said DTE and its shareholders would have to swallow all extra costs in case the operators don’t pay up. Doubters have shared several concerns that the company would find one way or another to have those costs covered in that scenario, whether it be through standard rate hike requests or otherwise.
Peretick said her board and their staff got to see several documents not available to the public, including unredacted versions of the contracts up for approval. She said she was satisfied enough was there to keep Michiganders safe.
Peretick argued because the companies and DTE would responsible for the infrastructure upgrades, the deal would benefit everyday ratepayers.
“The power supply agreement and energy storage agreement are well-negotiated contracts. They show a net financial benefit to DTE’s other customers of approximately $300 million per year,” she said.
Tim Bruneau is a Saline Twp. resident and part of a group fighting the project called Stop Saline Data Center. He said he didn’t believe it was worth the environmental tradeoff.
“All the money in the world cannot account for the ecological destruction that you’re going to do there,” Bruneau said after the meeting.
That possible money was part of the initial calculus when state lawmakers passed data center friendly laws last term. To meet clean energy goals, the state will need to build out massive clean energy projects, regardless.
State Senator Kevin Hertel (D-St. Clair Shores) was one of the lead bill sponsors.
Speaking Tuesday, Hertel said provisions, like the ban on data center costs being passed onto customers, do a much better job protecting residents than policies in over 30 other states that have also welcomed data centers.
“We consider the challenges that data centers present, we made sure that we’re going to be doing it in a responsible way here in Michigan, and every community needs to look at them individually and see if they work there or not,” Hertel said.
With several projects being floated around the state, however, the issue is likely to keep coming up. And a bipartisan group of House lawmakers is already trying to repeal the legislation altogether.
When asked Tuesday, Rep. Dylan Wegela (D-Inkster) said he was skeptical of AI in general.
“The only way that it will be profitable is if they can successfully take and replace working class jobs. And or the military industrial complex through creating the latest and greatest ways to kill people,” Wegela said.
Meanwhile, some state Senate lawmakers are introducing new bills to double down on data center regulation.
