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LANSING — Today, Michigan Attorney General Dana Nessel filed a petition for rehearing (PDF) before the Michigan Public Service Commission (MPSC) in case U-22058, wherein the Commission approved DTE’s special contracts to service a Google hyperscale data center in Van Buren Township. The Attorney General repeatedly demonstrates in her petition where DTE failed to meet its legal burdens, the MPSC ruled in error by applying incorrect standards of review and acting without reason or regard for ratepayer protections, and how the consequences of both are unnecessary risks of cost-shifting from DTE and Google to the utility’s household, business, and other classes of customers.
Attorney General Nessel raises in her petition several proposals for strengthening DTE’s cost recoveries from Google, establishing sufficient cost and benefit tracking mechanisms, and ensuring adequate cost backstops by Google and DTE that won’t ultimately fall on DTE’s existing ratepaying customers.
“These are massive, twenty-year, billion-dollar contracts between one of the wealthiest businesses on the planet, and one of the most powerful companies in the State,” said Attorney General Nessel. “The MPSC simply didn’t do their job here - failing to protect DTE’s existing residential and business customers, and accepting lousy contracts with weak terms to yet again appease a utility they’re supposed to keep in check. Sweetheart deals for data centers and unaccountable utilities run amok is not responsible government, and it’s not good business for the State. In this petition we’ve outlined serious concerns about how these contracts set up DTE customers to be burned.”
Among the Attorney General’s most significant concerns is the MPSC’s decision to adopt DTE’s contract-long “aggregation” approach to assessing projected ratepayer benefits against the utility’s actual costs to serve the Google data center. This decision presumably accepts years-long periods where DTE’s other customers will directly subsidize the operation of the hypserscale data center, and the MPSC itself concedes this will certainly happen, at least for a four-year period from 2035 to 2038.
DTE proposed to the MPSC a 20-year term-long “aggregation” standard for evaluating costs and benefits to and from its other customers, and assumes only to evaluate or demonstrate whether other customers bore any net-negative cost of serving the Google data center in view of the entire 20-year term, indicating that DTE expects its other customers to pay costs to support the data center and makes difficult any challenge to those costs until the contract term concludes. The MPSC order establishes the precedent and the expectation for their acceptance of DTE passing on data center costs to other ratepayers in any number of years under the presumption of a longer-term benefit that has not been adequately supported throughout the case and that may not ever be realized.
“The most shocking part of these contracts is that DTE and the MPSC are seemingly signing off on unknown ratepayer costs to support the Google data center, as long as DTE’s benefit projections can keep pace for 20 years” added Attorney General Nessel. “It’s imperative to keep DTE from charging Michigan households their own costs to fuel Google’s data center, and that we insist that costs and benefits be accounted for and reconciled annually. This aggregation standard, on a twenty-year contract, simply swings the doors wide open for customer cost-shifting, and that’s how the data center crash-lands onto your electric bill.”
The MPSC additionally adopted a collateral cap limiting Google and parent company Alphabet’s liability for costs of service, which the Attorney General urges the MPSC to reject outright on rehearing. As it did when considering the DTE contracts to service the Oracle and Open AI data center in Saline, the MPSC also ignored in this case significant transmission costs identified by the Attorney General that DTE has refused to account for in its contracts and assessments.
For these reasons, and more articulated within the petition, the Attorney General asserts the MPSC’s order demonstrates a litany of errors, such as by applying an incorrect burden of proof and an incorrect standard of review, by failing to meaningfully engage with or outright ignoring important arguments from the Attorney General’s briefing, and by repeatedly defaulting to acceptance of DTE’s proposed terms despite DTE’s failures to support the reasonableness and prudence of those terms. The consequence of these errors, argues Attorney General Nessel, is the imposition of mistaken and unnecessary cost-shifting risks onto Michigan ratepayers.
The Attorney General argues that, given DTE’s repeated failure throughout the contested case to meet its burden of proof under Michigan law, the MPSC must adopt on rehearing the recommendations made in her petition or instead reject the contracts outright.
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