Michigan Utility Contract Costs Face Regulatory Challenge
Business customers face potential rate impacts as regulators review a major data center's 20-year power agreement.
Updated on Oct. 30, 2026 in Utilities
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Michigan Attorney General Dana Nessel has filed a petition to rehear DTE Electric's 20-year power contract for a 1-gigawatt Google data center in Van Buren Township. The request follows the Michigan Public Service Commission's conditional approval of the project, which involves major infrastructure builds for a facility slated to reach full load by December 2028.
Why it matters
The attorney general contends that the contract structure risks shifting infrastructure costs onto existing utility customers, despite the utility's projections of $1.7 billion in long-term benefits. Regulators and businesses must now weigh the economic trade-offs of using 20-year financial models to approve large-scale industrial power agreements.
The utility's 20-year model projects $1.7 billion in system-wide benefits to offset costs, though DTE Electric data suggests other customers could face net cost increases from 2035 through 2038. The project requires the construction of 1,600 megawatts of renewable energy and 480 megawatts of battery storage.
The players
Dana Nessel
The Michigan Attorney General responsible for representing the public interest in regulatory and legal matters.
DTE Electric
An investor-owned electric utility providing energy services to customers across Michigan.
Michigan Public Service Commission
The state regulatory body with authority over utility rates, service standards, and infrastructure planning.
A global technology company that builds and operates data centers requiring significant dedicated power capacity.
The details
Under the current agreement, Google must pay for at least 80% of its contracted power. To support the load, DTE Electric is committed to building 1,600 megawatts of new renewable capacity and 480 megawatts of battery storage, alongside a 727-megawatt natural gas plant with carbon capture, which is scheduled for completion by 2033.
Timeline
December 2025: The commission approved separate data center contracts for Saline Township.
October 1, 2026: The Michigan Public Service Commission conditionally approved the Google data center contracts.
October 14, 2026: Van Buren Township Planning Commission approved the site plan.
2033: DTE Electric plans to complete the new natural gas plant.
2035-2038: Potential period of increased net costs for existing utility customers.
Market Landscape
The dispute challenges how the Michigan Public Service Commission applies traditional cost-of-service ratemaking standards to multi-decade industrial agreements. This filing marks a departure from the recent trend of approving data center utility contracts, such as the one cleared for Saline Township in 2025 without a contested hearing.
Business operators should monitor the rehearing outcome for potential changes to how future large-scale power infrastructure costs are allocated between industrial users and the broader rate base. If the challenge succeeds, it could set a stricter precedent for the risk-sharing terms required in future utility contracts.
The takeaway
The case highlights the tension between attracting large-scale digital infrastructure and protecting smaller commercial customers from long-term rate volatility. Operators should track whether the commission mandates more stringent cost-sharing guarantees in future utility contracts to mitigate the risk of rate hikes.
Further reading
For more on state power regulation and industry trends, see the Utilities section.
Source note: This article includes information reported by WLNS 6 Lansing.
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Should utility companies pass costs of powering new large-scale data centers to their existing customers?
