Attorney General’s Efforts to Review DTE Data Center Contracts Rejected Again At MPSC

LANSING – Today, the Public Service Commission (MPSC) denied Michigan Attorney General Dana Nessel’s critical efforts to examine massive energy contracts between DTE and Green Chile Ventures LLC. With no explanation given during their morning meeting, the three members of the MPSC, each appointed by Governor Gretchen Whitmer, unanimously denied the Attorney General’s motion to reopen (PDF) and her separate petition for rehearing (PDF) in case U-21990, wherein the MPSC conducted a secret review of the heavily-redacted contracts with significant consequences for Michigan utility customers.

The Commission additionally denied the Attorney General’s request for a contested case proceeding to review six heavily redacted contracts proposed by DTE for three battery storage facilities throughout the state meant to support the data center project.

“The Michigan Public Service Commission continues to perform a grave disservice to the State of Michigan and the utility customers of this state, to the only apparent benefit of the utility corporations and their new billion-dollar AI customers,” said Attorney General Nessel. “Since these secret contracts were first filed in October, I have requested and demanded that my office and other consumer advocates be able to review these contracts and ensure adequate protections for existing utility customers. At every opportunity the Commissioners have shut out everybody, choosing instead to keep DTE’s contract terms top secret, fast track their approval, and play fast and loose with the meager terms they claim to put in place. I have never seen, in the long history of our state, a process so secretive, rushed, and ripe for disaster as what the Commission rammed through here. My office will continue to explore our remaining options to protect the people of this state.”

In her motion to reopen, the Attorney General asserted the matter must be reopened and subjected to a contested case proceeding because DTE failed to accept the Commission’s conditions for approval; she argued that DTE’s response did not reflect the requirements of the Commission’s order and instead served as a counterproposal, offering weaker protection for existing DTE customers. In granting conditional approval of the two data center contracts, the Commission ordered (PDF) DTE to reply by letter within 30 days of the December 18th order accepting the conditions imposed by the Commission. Among other terms, the Commission ordered that DTE must make representations that “payments made by Green Chile Ventures LLC under Rate Schedule D11 and the special contracts will cover the costs to serve Green Chile Ventures LLC such that the costs of serving Green Chile Ventures LLC (including generation, transmission, distribution, or other costs) are not covered by other customers.”

DTE replied to the December 18^th order with a letter filed January 15th (PDF). Rather than making a representation as described in the order, DTE altered the conditional language, representing that “the aggregate revenues generated by the customer [Green Chile Ventures LLC] will cover the costs to serve them.” In her motion to reopen the proceeding, the Attorney General cautioned that DTE’s alteration in language might permit DTE to force upon its existing customers near-term cost subsidization of the data center, and that DTE has only represented that by the end of the 19-year contract that it expects the aggregate payments from the data center to have eventually risen to a sum greater than the company’s own costs to serve the data center. For this reason, the Attorney General argued, DTE failed to accept the conditions ordered by the Commission, and thus the matter of contract approval should be set for a contested case proceeding. 

In its order today, the Commission failed to directly respond to the Attorney General’s concern about near term cost subsidization and simply stated that it “finds that the reference to aggregate revenues in the acceptance letter does not change or somehow endanger the cost allocations that were placed on the approval.” Instead of directly addressing the concern, the Commission’s response suggests that near term cost subsidization of the data center by customers is what it intended in its original order.

Within her petition for rehearing, the Attorney General challenged the statutory authority of the Commission to approve these special contracts without a contested case hearing and requested a rehearing in this matter. The Attorney General additionally sought clarification regarding the extent of the conditions ordered by the Commission and their enforceability, as many of the conditions purportedly put in place by the Commission appear to require only repeated assurances from DTE with no further evidentiary support or commitment, rather than enforceable conditions imposing meaningful requirements on the utility or the data center customer. Attorney General Nessel also expressed concerns regarding DTE’s ability to serve as the financial backstop in lieu of sufficient collateral requirements from the data center customer, as dictated by the Commission. The Commission’s Order today provides no new explanation to address the many shortcomings of DTE’s proposals.

The MPSC has repeatedly, and again today, denied every request from the Attorney General to:

• Review the heavily redacted special contracts,
• Verify DTE’s claims of affordability benefits to its ratepayers and that servicing this customer will cause no increase in electric rates for its existing customers, and
• Verify adequate ratepayer protections such as collateral and exit fee terms to protect DTE and its customers if the data center fails to purchase the full projected amount of electricity, leaves the state before the full length of the contracts runs, or goes bankrupt.

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