Michigan Residents Challenge $6.4bn Datacenter-Driven Gas Plant Bill as DTE Energy Seeks Approval for 2.1GW Expansion

Michigan utility customers could be on the hook for $6.4bn to fund two new gas-fired power plants designed to serve hyperscale datacenter demand, a prospect that has drawn sharp outrage from residents and consumer advocates who argue the arrangement amounts to ordinary households subsidizing the world's wealthiest technology companies.

The dispute centers on DTE Energy, Michigan's largest energy provider and one of the nation's biggest utilities, which has asked state regulators to approve a long-term energy delivery plan that includes developing a combined 2.1 gigawatts of gas generation in 2031 and 2032 in counties just outside metro Detroit. The proposal would effectively double DTE's electric grid capacity over the next 20 years, driven by an influx of energy-hungry datacenters across the state.

DTE has already contracted with Google and Oracle to supply a combined 2.4 gigawatts of electricity to hyperscale datacenters—enough to power more than 1.8 million homes. The company is poised to announce two additional hyperscale contracts, and a potential total of roughly 6 gigawatts' worth of datacenter capacity could be contracted by year's end. Should all those agreements materialize, DTE may require more than the two gas plants currently proposed. About 2.3 million electric customers in south-east Michigan could be affected by the plan.

Yousef Rabhi, a public power advocate and former state representative who in August won the Democratic nomination for mayor of Ann Arbor, described any plan that saddles residential customers with datacenter costs as "deeply unjust." He said: "People who are struggling to feed their kids, to put diapers on their babies, to keep the lights on—those people are going to be subsidizing the wealthiest people on the planet to help them make more money, and that is insanity."

The Michigan Public Service Commission, which regulates the state's private utilities, has drawn fire over previous decisions concerning whether residential customers should effectively subsidize datacenters. The commission's leadership is composed of appointees of Governor Gretchen Whitmer, a pro-business ally of big tech whose popularity in the state has declined in part over her support for datacenters, which remain unpopular with many residents.

DTE Energy said in a press release that "the plan reflects what [customers] told us matters most to them." Matt Paul, president of DTE Electric, said: "We designed this plan to be achievable and affordable—grounded in real analysis and feedback from customers and built to deliver cleaner energy while meeting Michigan's growing needs for the next 20 years and beyond." The plan also calls for a significant increase in renewable energy and battery storage, which consumer advocates praised as a positive step.

The MPSC will gather input from industry and environmental groups and consumer advocates, among other stakeholders, and issue a preliminary decision within 300 days. DTE has said the gas plants will replace a coal plant that is being retired, but the retirement agreement was developed in 2023. While DTE around that time said it would need about 940 megawatts of gas in the long term, it now claims it needs roughly 2.3 times more gas generation than previously anticipated, raising questions about whether the coal plant closure is truly a driver of the gas expansion.

"We are very comfortable with saying that the amount they are currently requesting—the vast majority of that could be attributed to datacenters," said Helen Li, a senior attorney with Earthjustice, which is representing the Sierra Club in the regulatory case. Li added that "DTE's approach to the question of 'who pays' is unclear, convoluted, and does not ensure that ordinary ratepayers won't foot the bill for these new, energy-hogging neighbors."

The datacenter buildout also may derail Michigan's nation-leading climate transition laws. Michigan in late 2023 passed legislation requiring utilities to transition to renewable energy by 2040, but the law included an "off-ramp" allowing utilities to continue running or building fossil fuel plants if renewable sources cannot handle the grid's load. At peak, DTE's grid already demands more than 9.5 gigawatts of power while the grid's capacity stands at 11 gigawatts. DTE may already exceed that capacity with the datacenters for which it has contracts, and it may soon announce several more. The company also develops gas infrastructure across the US, meaning its parent company benefits from datacenters and is incentivized to add more to the grid.

The energy generation mix DTE proposed appears to potentially bring it close to meeting the climate law's requirements, but part of that relies on installing unproven carbon capture technology. Additionally, more gas plants could be built if additional datacenter contracts are approved, which appears likely. "This blows a hole in the state's clean energy laws," Rabhi said. "Of course they are going to build fossil fuel, and there is a massive environmental cost to this."