Will Customers Foot a $6.4 Billion Gas Plant Bill for Datacenters? Michigan Residents Voice Outrage

In the US state of Michigan, a proposal to build two new gas plants to meet the growing electricity demand of datacenters has sparked strong anger among residents. If approved, customers could be left carrying $6.4 billion in costs — raising the question of why ordinary families should pay for benefits flowing to technology companies.

DTE Energy, among the biggest utilities in the United States, is requesting approval to build two new gas plants to meet datacenter demand. The company has asked regulators to approve a long-term energy delivery plan.

The plan includes developing a combined 2.1 gigawatts of gas plants in 2031 and 2032, in counties just outside metro Detroit. DTE is Michigan's largest energy provider, and among the nation's biggest utilities.

Datacenters' hunger for energy has grown so much that the company has proposed doubling its electric grid capacity over the next 20 years. At the centre of this huge energy expansion lies the growing demand of hyperscale datacenters.

The company has already contracted with Google and Oracle to provide a combined 2.4 gigawatts of electricity to hyperscale datacenters — enough to power more than 1.8 million homes. It is also poised to announce two more hyperscale contracts.

If all came to fruition, a potential total of roughly 6 gigawatts' worth of datacenters could be contracted by the year's end. In that case, DTE could need more than two gas plants, it is feared.

About 2.3 million electric customers in south-east Michigan could be affected by the plan. Any plan to saddle residential customers with datacenter costs was 'deeply unjust,' said Yousef Rabhi, a public power advocate and former state representative who in August won the Democratic nomination for mayor of Ann Arbor.

'People who are struggling to feed their kids, to put diapers on their babies, to keep the lights on — those people are going to be subsidizing the wealthiest people on the planet to help them make more money, and that is insanity,' Rabhi continued. His words echoed the anger of residents.

The Michigan Public Service Commission (MPSC), which regulates the state's private utilities, has also drawn fire over its previous decisions about whether residential customers should effectively subsidize datacenters. The commission's leadership is filled with appointees of Governor Gretchen Whitmer, whose popularity in the state has fallen in part over her support for datacenters, which are unpopular.

DTE Energy wrote in a press release that 'the plan reflects what [customers] told us matters most to them.' DTE Electric's president, Matt Paul, said the plan was designed to be achievable and affordable — grounded in real analysis and feedback from customers, and built to deliver cleaner energy while meeting Michigan's growing needs for the next 20 years and beyond.

The plan also calls for a significant increase in renewable energy and battery storage, which consumer advocates praised as a positive step. But that has not ended the debate over the cost burden of the gas plants.

The MPSC will take input from industry and environmental groups and consumer advocates, among other interests, and issue a preliminary decision within 300 days. Hearings and debate over the plan will therefore continue in the coming months.

DTE has said the gas plants will replace a coal plant that is being retired, but the retirement agreement was developed in 2023. While DTE around that time said it would need about 940 megawatts of gas in the long term, it now claims it needs about 2.3 times more gas generation than previously anticipated, raising questions about whether the coal plant closure is truly a driver of the gas expansion.

Michigan's debate is a microcosm of similar tensions nationwide, highlighting how the utility industry benefits from unchecked datacenter growth while the burden of its costs falls on ordinary customers — a complaint that is now growing louder.