LANSING — Michigan utility regulators signed off on DTE Energy’s agreement to power a hyperscale data center planned for Saline Township, despite at-times heated opposition calling for greater scrutiny of the project and the electric company’s plan to provide the massive amount of energy needed for it without straining the state’s electric grid or raising rates for customers.
The Michigan Public Service Commission voted 3-0 on Thursday, Dec. 18 to approve DTE’s “ex parte” motion formalizing its contract to provide an initial 1.4 gigawatts of computing power, or the amount of energy the planned data center will pull from the grid, with the backers of the Saline Township project. Developer Related Digital, software company Oracle and generative artificial intelligence company OpenAI are behind the data center, which is part of OpenAI’s “Stargate” project to power AI development. OpenAI runs the ChatGPT program, which has become synonymous with generative AI globally.
Developers announced the multibillion-dollar project in October after Related Digital settled a lawsuit with the Saline Township board, which initially denied rezoning a parcel of farmland for the data center. The planned campus will consist of three single-story buildings, each 550,000 square feet, on a 250-acre site north of U.S.-12. Construction is slated to begin early next year.
In public statements and regulatory filings, the Detroit-based utility argued a contested case was not needed because its agreement to supply energy for the planned campus wouldn’t lead to higher residential energy costs or place a strain on current energy demands. The company has pointed to a 2024 state law that bars data center developments from passing energy costs onto residents in order to qualify for tax breaks.
By granting DTE’s ex parte request, commissioners approved the contract without a contested case process where intervening groups could file expert witness testimony and seek evidence through discovery over the course of the proceeding, which typically takes about a year.
When Commissioner Katherine Peretick moved to approve the ex parte motion, several members of the crowd expressed dismay at the decision, shouting at commissioners to let them make public comments before the vote.
“I’m not going to allow you to disrupt this meeting,” MPSC Chair Dan Scripps said. Scripps later said he understood the frustration from members of the public, although some in attendance continued to shout during his remarks. At one point, Scripps asked a woman to leave the meeting after she continued to deride the data center contract.
Green Chile Ventures, an Oracle subsidiary, is covering energy costs for the Stargate facility, under the contract approved Dec. 18, regulators said. Peretick said the order also calls for DTE to bear responsibility to cover costs in the event developers cannot.
Several environmental groups, a coalition of major businesses in Michigan and Attorney General Dana Nessel’s Office had all argued against the motion, asserting DTE should have to prove its claims about the data center’s potential impact on the electric grid and current residential rates.
Ultimately, commissioners sided with DTE. Scripps said after review by the MPSC staff, the commission judged the power supply agreement between DTE and developers was in the public interest.
“While I recognize the concerns about the process in this case, the reality is the commission used a very similar process in a number of cases in recent years,” he said, of the ex parte proceedings.
After the vote, commenters said they felt misrepresented by the commission and the process in which the power agreement was approved.
“I, along with everyone here … probably don’t feel like they’ve been publicly served today,” said Wendy Albers, of Augusta Township. “When you make these decisions, you’re eliminating the very necessity of what public service bodies are all about.”
“I appreciate the protections you put in place, but I just don’t trust them,” Albers added.
Another commenter who said she lived a few hundred yards from the planned Stargate site said the MPSC let down the public with its vote.
“I know you look at the facts, but this is affecting real people,” said Kathryn Haushalter. “I wonder in five years, would you come over to my house and get a drink of water?”
“What you did is hurting real families. You can say and justify it however you want, but I want you to remember my kids, and remember me. You’re hurting us. You do not serve me.”
DTE officials commended the MPSC vote. Ryan Lowry, a DTE spokesperson, said in a statement the company remains committed to protecting its residential ratepayers.
“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,” Lowry said.
A Related Digital representative also lauded the MPSC vote.
“Michigan is truly leading the way in terms of creating a framework for responsible digital infrastructure development, and we are pleased this important project meets that test by being developed with respect for Michigan’s water and natural resources while providing substantial long-term economic benefits,” spokesperson Natalie Ravitz said in a statement.
One provision in the contracts between DTE and the data center developers calls for a minimum billing demand of 80% of the contracted energy capacity. Through this provision, DTE will charge developers for the costs of a minimum of 80% of the energy it has agreed to provide, regardless of whether the data center uses it. This is sometimes referred to as a “ready to serve” stipulation. An MPSC order in a case with Michigan’s other large utility, Consumers Energy, established the provision earlier this year.
The minimum contract duration for the power agreement between DTE and Green Chile Ventures is for 19 years.
Supporters of the data center in Saline Township have pointed to job creation and a boost in the local tax base as benefits the facility would provide. When the project was announced in October, developers said it would create 2,500 union construction jobs and 450 on-site jobs once the facility is built. At a Dec. 3 public comment hearing, several labor union representatives and area chamber of commerce representatives voiced support for the data center campus.
Gov. Gretchen Whitmer is also a supporter of the Saline Township facility, calling it a vital component of Michigan’s economic transition and a key asset in the national effort to remain globally competitive for similar projects.
But opponents of the Stargate plans, and hyperscale data centers in general, say they’re not worth the environmental and energy concerns.
Because generative AI, like what the Stargate project is intended to support, takes a lot of energy to power, hyperscale data centers pull significant amounts of electricity from the grid. The initial 1.4 gigawatts of energy planned for the Saline Township campus is more energy than DTE produces at its Fermi 2 nuclear power plant in Newport. And there are plans for a potential further 3 gigawatts of computing power at the campus, according to regulatory filings.
In many large data centers, a great amount of water is needed to cool the air that gets heated by constantly running servers and other computer equipment. Developers behind the Stargate proposal say the facility will use a closed-loop water system and won’t tap into the Great Lakes, although skeptics say closed-loop water systems are less energy efficient than direct water cooling or liquid emersion cooling systems.
There are also those wary of the increased demand on Michigan’s energy grid presented by large data centers, and how greater power needs could slow the state’s clean energy transition. Under state law approved in 2023, 100% of its energy needs to be generated from sources defined as “clean” by 2040. But that law does allow energy providers to seek “good cause exemptions” if they don’t believe they can meet energy demands through clean sources. This, proponents argue, opens the door for continued reliance on fossil fuels like coal-fired plants to meet energy demand.
As part of the order approved Dec. 18, DTE must inform the MPSC in a yearly report how the data center’s operation affects its overall energy portfolio.
There are also concerns about job forecasts at large data center developments, since the facilities serve more of an infrastructural purpose than a typical business once built.
New data centers are being planned around Michigan. In some cases, like in Saline Township or a recently approved project in Southfield, developers are able to overcome local opposition, but in others, public opinion has played a major role in defeating projects. Developers pulled plans for a hyperscale data center in Howell Township in December after residents voiced opposition. In Kalkaska, near Traverse City, developers similarly abandoned plans for a data center, with the president of the company hoping to build the data center directly crediting local opposition to the project.
The MPSC is a three-member body tasked with overseeing utility companies in Michigan. The governor is tasked with appointing all three members, although state law mandates that no more than two commissioners are from the same political party. Whitmer appointed all three current commissioners.
You can reach Arpan at [email protected].
