DTE links rate hike pause to data center approvals; Michigan AG calls it 'ransom note'

DTE Energy has proposed a substantial $474.3 million electric rate hike for Michigan residents, which would increase residential electric bills by 9.7%. The utility has conditionally offered to freeze future rate increase requests for at least two years if an Oracle data center in Saline Township becomes operational by 2027 and other regulatory approvals are secured for its data center contracts. Michigan Attorney General Dana Nessel has vehemently opposed DTE's proposal, labeling it a "ransom note" and announcing her intervention in the latest rate case. She also previously appealed the conditional approval of power contracts for the Saline Township data center to the Michigan Court of Appeals, arguing that the expedited process used did not adequately protect ratepayers. The Michigan Public Service Commission (MPSC) previously granted DTE a $242 million rate increase in February and conditionally approved contracts for the 1.4-gigawatt Oracle and OpenAI data centers in December. MPSC Chair Dan Scripps defended these approvals, citing strong consumer protections and estimated $300 million in affordability benefits. However, groups like the Michigan League of Conservation Voters and the Citizens Utility Board of Michigan (CUB) criticize DTE's practice of tying rate hikes to controversial data center deals and highlight Michigan's high energy costs and poor grid reliability. Environmental concerns also arose regarding the Saline Township project, for which the Michigan Department of Environment, Great Lakes, and Energy (EGLE) granted air and wetland permits, with a National Pollutant Discharge Elimination System application still under review. Related Digital, the developer behind the $16 billion Saline Township project, announced securing financing and stated that major construction is "well underway." DTE is also pursuing a separate contested rate case for a planned 1-gigawatt data center in Van Buren Township. Concerns about increased electricity demand, potential need for new power plants, and the financial risks to ratepayers if data centers don't materialize as planned were voiced by experts. In a separate development, the Ypsilanti Community Utilities Authority approved a 12-month moratorium on supplying water to data centers, impacting facilities including a planned University of Michigan project, adding another layer of complexity to data center development in the region.