Earlier this week, Michigan’s utility regulator announced that it would hold an online public hearing in a case that’s generated a lot of controversy: DTE Energy’s request for an expedited case to approve its plan for providing power to a huge new data center in Saline Township, outside Ann Arbor. That hearing “will add an important element of transparency” to that decision-making process, Michigan Public Service Commission Chair Dan Scripps said in a statement announcing the hearing.
But the announcement drew immediate condemnation from Michigan Attorney General Dana Nessel, who blasted it as a sham that only gives the illusion of transparency. “Despite this announcement, the MPSC is still not allowing for meaningful intervention and review on these DTE data center contracts,” Nessel said.
What’s going on here? Why is this particular data center drawing so much attention and sparking such a fight? Come along as we delve into the details of this dispute, which many see shaping up to be a test case as the enormous data centers that power AI proliferate across Michigan and the country.
A behemoth of a data center
Saline Township – a rural community of under 3,000 people in Washtenaw County – initially rejected the data center proposal. The local government said the development didn’t conform to the township’s master plan, and questioned whether it had the emergency infrastructure to support the project.
But the township was sued by Related Digital, a company that develops properties on behalf of tech companies and is working on this data center project with the companies Oracle and Open AI. The companies claimed the township was using its zoning rules to illegally exclude certain types of development. The two sides settled last month, allowing the project to move forward.
(For more details about the ins and outs of data centers, see this excellent guide from Planet Detroit).
The data center itself is expected to be massive. It's part of a multinational artificial intelligence infrastructure project called Stargate. DTE, the power utility in southeast Michigan, said it’s expected to consume about 1.4 gigawatts of electricity – equivalent to about one-fourth of DTE’s current grid capacity. That’s more than the electricity generated by an average nuclear power plant, and comparable to the power consumption of some mid-sized cities.
According to its case filings with the MPSC, DTE expects to be able to handle that without raising rates for its other customers. DTE’s proposed contract with the data center’s developers and operators “ensures that the Company will collect from the Customer a minimum amount of revenue regardless of the Customer’s actual demand,” according to a DTE expert, who said that “helps ensure a minimum level of affordability benefit will be realized by the Company’s other customers.”
Questions about a fast-tracked, ex parte case
Now, the developers and DTE just need the MPSC’s sign-off to get the data center project rolling. And they’ve asked for it on a very short timeline: DTE filed its application for “approval of special contracts” October 31, and wants an answer from MPSC by December 5.
The utility can request such a fast timeline because it's pushed for the case to be considered ex parte – that is, outside of the usual process that power utilities go through when they’re asking for a rate increase, or in this case, the addition of a major new customer to the grid. A so-called contested case would allow for various interests and stakeholders to intervene, submit evidence, and make their own case for why the utility should or shouldn’t make a certain policy change.
That’s exactly what Nessel pointed out in her statement released on Tuesday: “DTE has specifically requested their application be approved with no formal hearings or any of the traditional oversight in place that secure the interests of ratepayers and the public."
The hearing – a move toward transparency, or “performative listening”?
Yes, more on the public hearing. On Tuesday, the MPSC announced that it would hold one on December 3. The hearing will last two hours, and will be held virtually using Microsoft Teams.
In its announcement of the hearing, the MPSC acknowledged the data center would represent "a very large new customer on the power grid" and that it has a responsibility to "shield residential and other business customers from subsidizing data centers." Scripps said the hearing would be a chance for the public “to have their voices heard” on those issues.
But instead of quieting critics, the announcement drew an immediate rebuke from Nessel. “Despite this announcement, the MPSC is still not allowing for meaningful intervention and review on these DTE data center contracts,” she said. "Without formal hearings and a contested case declaration, this alone would amount to little more than performative listening rather than thorough public scrutiny.”
Nessel "called for public hearings in this application that would allow for intervention by consumer protection organizations, scrutiny of the application by experts, and the creation of an evidentiary record the MPSC and parties could evaluate," her statement said. “Today’s announced ‘public hearing’ accomplishes none of these, and instead serves only as a forum for public comment."
Nessel noted that by its own rulings, the MPSC cannot make formal decisions based on public comment or sentiment. “The MPSC is under immense political and industry pressure to fast-track these contracts; contracts that have the power to shape our energy landscape for decades,” she added. “The contracts remain public only under significant redactions, and promises made by DTE to hold ratepayers harmless remain flimsy and unsupported in the public record.”
“The only process … that requires actual evidence”
Nessel isn’t the only one attempting to push for a contested case. On Thursday, a coalition of environmental and public utility groups filed a motion to intervene in DTE’s case. They contend that it’s actually illegal for the MPSC to handle this case ex parte, citing state law that they believe requires a contested case in instances where other utility ratepayers are potentially affected.
In their petition to intervene filed with the MPSC, the groups write that “a contested case proceeding is necessary to fully evaluate DTE’s proposal and to ensure that the special contract provisions for the Customer sufficiently protect DTE and its existing customers.” They added that a “contested case proceeding would align with Commission precedent” established in a previous case involving Consumers Energy and large data center customers.
“DTE and the MPSC cannot claim transparency while shutting the public out of the only process that requires DTE to support its claims with actual evidence,” said Bryan Smigielski of the Michigan Sierra Club.
“If the company believes these contracts won’t raise bills or accelerate fossil dependence, it should welcome a contested case where its claims can be tested. Asking Michiganders to rely on informal assurances made on behalf of massive tech corporations as data centers across the country destabilize grids, derail climate plans, and drive up costs is indefensible,” Smigielski said.
But ultimately, unless someone files a lawsuit – which is always a possibility in these kinds of disputes – it remains up to the MPSC to decide. The only thing that’s clear at this point is that whatever they do decide, it will be another inflection point on the pathways being forged between regulators, utilities, and the powerhouse AI companies that are changing our economy, our landscapes, and how we live.
To participate in the public hearing
The public hearing will be held virtually through Microsoft Teams on Wednesday, December 3, from 6:30 to 8:30 p.m.
Anyone wishing to participate may join through the meeting’s Microsoft Teams link.
You can also join by phone by dialing 1-248-509-0316 and, when prompted, entering the conference ID 593258092#.
Editor's note: DTE Energy is among Michigan Public's corporate sponsors.
