DTE says it will pause rate hike requests for 2 years, citing increased revenue from data centers

DETROIT (FOX 2) - DTE Energy says it will not ask for an electric rate hike until 2028, citing increased revenue from proposed data centers.

This pause begins after next week's rate increase request filing with the Michigan Public Service Commission (MPSC).

According to the utility company, two data center contracts will contribute almost $9 billion to DTE to help improve its electric system through 2045. The company said this boost will reduce money needed from other customers.

"That’s why we’re excited to see the expected benefits of responsible data center development come to fruition," said Joi Harris, president and chief executive officer of DTE. "This new industry is not only helping to grow Michigan’s economy, but once the data centers are fully online, it will make energy more affordable for all customers while bolstering our investments in creating the grid of the future."  

What's next:

DTE is requesting a $474.3 million rate hike before the planned two-year pause. 

The company said that money would be used to improve its electric grid and power generation. The MPSC will review this request and will likely not make a decision until next February. This means that although DTE will not request further rate hikes for a couple of years, customers will see their bills increase if the commission approves the request.

The pause on request also hinges on the first data center being up and running by the end of 2027. DTE is supporting a data center in Saline Township that has already been approved by the MPSC, while a second data center in Van Buren Township is awaiting approval.

"As long as the first data center project we’re supporting comes online as planned by the end of 2027 and we’re able to receive other regulatory approvals, we will refrain from filing another rate request until at least 2028 — providing customers two years without an increase in rates after the current request is complete," Harris said.

Concerns:

Despite DTE insisting that data centers will benefit its customers, there have been concerns about how much energy these centers will use, and the potential strain that could cause.

For instance, the proposed Van Buren Township data center is expected to operate on one gigawatt of electricity, enough to power 800,000 homes, a day.

Others have expressed worries that residents could end up footing the bill for the energy that these facilities consume. Michigan Attorney General Dana Nessel argued in a motion filed recently in front of the MPSC claiming that altered language in an order from regulators would fail to protect customers from rising costs associated with the Saline Township data center.

"The Commission ordered a mere written representation from DTE that its existing customers would not subsidize the costs to serve this massive data center, and DTE failed to even meet that low bar," said Nessel in a statement.

In approving DTE's contracts with the tech companies, the Michigan Public Service Commission gave its blessing on the condition that customers were protected.

Nessel says that is no longer happening, saying DTE altered the language that was part of the commission's original approval.

"This alteration in language, the Attorney General cautions, may permit DTE to force upon their existing customers near-term cost subsidization of the data center," a release from her office said, adding the less-stringent language could mean customers could have to partially pay for to power the facility.

The other side:

DTE maintains that customers will not see their rates increase as a result of the data centers.

According to a press release from DTE, "Data centers—including the one DTE has been approved to support in Saline Township and the project under review in Van Buren Township – are governed by separate contracts and are required to pay the full cost of the infrastructure needed to serve them, ensuring other customers are protected. DTE customers will NOT subsidize data center rates."

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