Michigan Regulators Approve DTE Data Center Power Contracts with Added Ratepayer Protections
The Michigan Public Service Commission has conditionally approved an application from DTE Electric to supply power under special contracts to a large data center planned for Washtenaw County, while imposing additional safeguards intended to protect residential and other customers from bearing related costs.
The approval applies to a proposed 1,383-megawatt data center in Saline Township to be developed by Green Chile Ventures LLC, a subsidiary of Oracle. DTE Electric filed the application for the special contracts following the Oct. 30 announcement of the project by Oracle, OpenAI and Related Digital.
Under the commission’s order, DTE Electric will be responsible for any costs associated with serving the data center that it cannot recover from Green Chile Ventures. Regulators said the condition is designed to shield other customers from financial risk tied to the development or continued operation of the facility.
The commission also required DTE Electric to update its emergency procedures to ensure that, in the event of an involuntary load shed, electricity service to the data center would be reduced or interrupted before service to other customers. Michigan has not experienced an involuntary load shed related to generation shortages since the formation of the Midcontinent Independent System Operator energy market, according to the commission.
The primary supply agreement includes terms that go beyond those in DTE Electric’s standard tariff for large-load customers. Those provisions include a minimum contract term of 19 years, a minimum billing demand of 80% of contracted load, and a termination payment of up to 10 years of minimum billing demand if the facility ceases operations early.
The commission said the data center is expected to contribute significantly to fixed system costs, which would otherwise be recovered from existing customers. DTE Electric estimated the net benefit to other customers at about $300 million.
As part of the approval, regulators directed DTE Electric to submit additional analyses in upcoming planning filings, including comparisons of resource needs with and without the data center’s load, updated capacity assessments, and evaluations of how incremental renewable energy and energy waste reduction costs would be allocated to avoid impacts on other customers.
The order also includes a proposed energy storage agreement requiring Green Chile Ventures to fund the development of 1,383 megawatts of energy storage over a 15-year period. DTE Electric would develop, own and operate the storage facilities, while the data center developer would receive revenues earned in the wholesale market.
The commission directed DTE Electric to file an application within 90 days proposing a new tariff for very large-load customers, such as data centers. DTE Electric must also notify the commission within 30 days whether it accepts the conditions of the order or seeks review through a contested case.