The Michigan Public Service Commission (MPSC) has been handling a flurry of activity in recent weeks, particularly surrounding the issue of data centers and their electricity demands. The commission recently received an application from electric utility DTE seeking approval for a contract with a data center that would require a massive 1.4 gigawatts of electricity. This deal, announced by Governor Whitmer’s office, would increase DTE’s load by 25%, equivalent to the energy needs of over a million homes. With an expedited, ex parte filing, DTE is seeking direct approval from the commission without allowing advocates like UCS to intervene.
In another case, Consumers Energy filed a docket seeking changes to terms and conditions for data centers and other large loads. UCS, along with other clean energy organizations, intervened in the case and made recommendations to ensure that data centers support Michigan’s goals of reliable, clean, and affordable electricity. While the MPSC approved some of the proposed measures, there are still gaps in ensuring grid reliability and meeting clean energy requirements.
Consumers Energy’s application included requirements such as coordinating significant load changes with the utility, establishing minimum contract lengths, and charging upfront fees for transparency and discouraging speculative projects. While these measures benefit affordability for utility customers, they also serve the company’s financial interests as a for-profit utility.
UCS advocated for additional measures to support clean energy, reliability, and emissions reductions, including data centers sourcing their own clean energy, prioritizing load flexibility, and regular reporting on meeting requirements. The MPSC’s final order approved Consumers Energy’s terms but fell short on addressing clean energy requirements and interconnection reform.
The commission did, however, strengthen affordability protections by requiring cost allocation to be addressed in traditional rate cases. Consumers Energy must now provide detailed applications demonstrating that costs from large load customers are not being shifted to other customers. While the MPSC deferred decisions on clean energy requirements to future proceedings, there is concern that without clear guidance, utilities may not adequately address this critical issue.
Overall, the recent actions by the MPSC highlight the challenges and opportunities in balancing the needs of data centers with those of other utility customers and the state’s clean energy goals. As advocates like UCS continue to engage in these proceedings, there are opportunities to push for stronger measures that ensure a reliable, clean, and affordable energy future for all Michiganders. First and foremost, it is clear that the issue of interconnection reform and the integration of large data centers into the grid is a complex and multifaceted one. The challenges of ensuring cost protection for other ratepayers, maintaining reliability, meeting clean energy goals, and leveraging new technologies like batteries and load flexibility all need to be carefully considered and balanced.
The experiences of Consumers Energy and DTE in Michigan serve as important examples of the need for thorough evaluation and public input in such cases. The MPSC’s decision to order a contested case in the Consumers Energy proceeding demonstrates the importance of establishing a robust evidentiary record and ensuring that all impacts are fully understood before making a decision.
Moving forward, it is crucial that the MPSC and utilities in Michigan, as well as regulators and utilities in other states facing similar challenges, take a comprehensive and proactive approach to addressing the integration of large data centers into the grid. This includes considering the full range of potential impacts, exploring innovative solutions, and engaging with stakeholders to ensure that the interests of all parties are taken into account.
As UCS and our partners continue to advocate for a more transparent and inclusive process in the DTE case, we hope that our efforts will help to inform and shape the development of policies and practices that can effectively address the challenges of integrating large data centers into the grid. By working together, we can ensure that the transition to a more flexible, clean, and reliable energy system benefits everyone involved. The Michigan Public Service Commission (MPSC) is currently addressing concerns about cost shifting and the impact of new data centers on clean energy requirements. In their evaluation of DTE’s application, the MPSC is seeking detailed information on how utilities will prevent cost shifting, which is currently lacking in the application.
Furthermore, the MPSC and major utilities in Michigan need to pay more attention to the clean energy requirements of new data centers. The MPSC should issue specific requirements for assessing the impacts of large loads on clean energy obligations in utilities’ plans. Additionally, utilities should provide detailed information on how each new data center will comply with clean energy requirements when seeking interconnection approval.
In addition to clean energy requirements, the MPSC must also consider the need for reform in the load interconnection process to account for load flexibility. This reform could support grid reliability and affordability, especially in light of the increasing demand for hyperscale data centers.
Hyperscale data centers are changing the way the grid is planned and operated, and it is crucial that Michigan’s utility regulators address concerns about cost shifting, clean energy requirements, and interconnection reform. By ensuring that data centers support a clean, reliable, and affordable grid, the MPSC can protect the interests of all Michiganders.
