Michigan Regulators Approve the State’s First Data Center Tariff Provisions an Important Step Toward Protecting Ratepayers from Skyrocketing Energy Costs

Lansing, MI —

Today, the Michigan Public Service Commission (MPSC) approved new tariff provisions that are an important first step toward protecting Consumers Energy (Consumers) customers from the massive costs that would be incurred to serve potential data centers. The ruling establishes new tariff provisions for service of data centers and other large-load customers of Consumers — which are the first such tariff provisions in the state.

With data centers continuing to demand enormous amounts of electricity to power them, shifting the costs onto everyday ratepayers, these new tariff provisions will help ensure Michiganders don’t have to foot the bill for the massive energy infrastructure spending that would be needed if large data center growth comes to the state.

The ruling comes months after Consumers filed an application with the MPSC to create new  tariff provisions to meet projected data center demand. In its February 2025 application, Consumers said it had 15 GW of potential data center demand in its economic development pipeline. While the company admitted it doesn’t expect anywhere near that much to be built, experts estimated that serving even roughly 3 GW of new data center demand could cost up to $8 billion in new power generation, transmission, and distribution infrastructure, raising concerns about whether data centers or regular ratepayers would unfairly foot part of the bill. Consumers’ application failed to address whether approving a tariff for so many data centers would make it harder for it to meet Michigan’s clean and renewable energy legal requirements.

In response, Michigan Environmental Council, NRDC, Sierra Club, and Citizens Utility Board of Michigan (MNSC, collectively), represented by Earthjustice and Troposphere Legal, intervened to argue that stronger protections were needed to help ensure that ratepayers would not be on the hook unfairly for expensive new infrastructure, and that new data center customers would not undermine the state’s clean energy standards. MNSC pushed for stronger requirements such as longer contracts, fairer cost sharing, and clear rules that utilities and data centers need to ensure compliance with Michigan’s Renewable and Clean Energy Standards.

The ruling approved, with some modifications, Consumers’ proposals meant to protect customers from the risks of stranded assets, largely rejecting efforts by the Data Center Coalition to weaken such protections. The order also states that projected rate increases for residential customers would be “unacceptable,” and requires Consumers to do an analysis in its next rate case on how current rates could cause other customers to subsidize the costs of serving data centers. Disappointingly, however, the PSC did not require steps to ensure that the addition of data center load will not undermine compliance with clean and renewable energy standards, punting the issue to other dockets instead.

Though it is still unknown how many or which data centers and large load customers might end up coming online in Consumers’ service territory, the utility announced at the end of July that it had reached an agreement with a data center developer for an “up to 1 GW” data center.

In the last two years, state utility regulators throughout the country have begun addressing the rapid growth of proposed data centers in tariff proceedings, establishing new terms to manage large load customers that otherwise threaten to overwhelm both ratepayers and the grid.

“When data centers arrive, they typically bring the threat of higher utility bills and too often the undermining of clean energy goals. Today’s ruling is an important step towards reducing the risk of the former but, unfortunately, fails to address the latter. We are heartened to see the approval of protections against stranded asset costs, and a pathway to ensuring that data centers do not raise costs for Michiganders who are already facing increasingly unaffordable utility bills. We agree with the Commission that such a result would be unacceptable, and look forward to working with all stakeholders to ensure that data centers pay their own way. At the same time, we will continue to fight to ensure that data centers that do come to Michigan are served by clean energy, rather than dirty fossil fuels,” said Shannon Fisk, director of state power sector advocacy at Earthjustice.

“This ruling is an important first step towards protecting Michiganders from the energy costs of data centers, and the speculative rush that’s threatening to drive up our already high costs of electricity and deplete our water supply. We cannot afford to continue building high-cost gas, or running expensive, dirty, and old coal plants just to feed the data center rush. We expect regulators and our utilities to prioritize the use of cleaner, cheaper renewable energy to benefit all Michiganders,” said Elayne Coleman, Sierra Club Michigan chapter director.

“The MPSC’s order makes strides on customer protection, ensuring that ratepayers aren’t subsidizing large customers like data centers. The Commission falls short on compliance with Michigan’s renewable and clean energy standards. Without guard rails from the public service commission order, it creates uncertainty about whether these large new customers will be powered by clean energy and ultimately help Michigan meet its clean energy goals,” said Derrell Slaughter, Michigan Policy Director for Climate & Energy, at NRDC.  

“In states across the country we have seen that without strong protections in place data centers raise energy bills and damage efforts to protect our climate. Today’s commission order puts in place some needed safeguards to prevent Consumers Energy customers from being left holding the bag. But more must be done to ensure average Michiganders aren’t subsidizing multibillion dollar data center companies and to make certain data centers are powering their facilities with clean, renewable energy. We look forward to working with the Commission and Michigan decision-makers to adopt comprehensive safeguards for Michigan,” said Charlotte Jameson, Chief Policy Officer, Michigan Environmental Council.