Michigan AG Dana Nessel challenges energy rules amid data center boom, calls for stricter protections, Consumers Energy responds

LANSING, Mich. — A dispute is brewing over how much protection Michigan residents need as the state attracts large data centers and other energy-intensive businesses.

Michigan Attorney General Dana Nessel filed a petition Monday asking state regulators to reconsider rules they approved last month for serving data centers. She argues the terms are too weak and could stick ordinary customers with the bill if these massive energy users don’t cover their costs.

Consumers Energy responded Thursday, calling Nessel’s challenge baseless and accusing her of opposing economic growth that would bring jobs and tax revenue to Michigan.

The clash stems from a November order from the Michigan Public Service Commission that set guidelines for businesses using at least 100 megawatts of electricity, roughly enough to power 80,000 homes. Currently, Consumers Energy only serves one customer of that magnitude. However, with a boom in data centers across the country as artificial intelligence (AI) grows, many officials are hoping to bring them here.

Nessel is asking regulators to require stricter terms for the businesses:

Longer contracts: 20 years instead of 15 yearsHigher guaranteed payments: 90% minimum billing instead of 80%Lower size threshold: 50 megawatts instead of 100 megawattsPublic review process: Contested hearings instead of private applications

In her 17-page petition, Nessel argues the commission ignored her cost analysis showing that under current terms, a 100-megawatt customer could leave other ratepayers with an $80 million shortfall.

“The Commission’s Order presents arbitrary and capricious analysis,” Nessel wrote, adding that the approved terms set “unnecessarily less-protective” standards that other utilities are already copying.

She also wants explicit requirements that large customers cover their share of Michigan’s renewable energy mandates, which currently require utilities to get 60% of their power from clean sources by 2035.

The utility fired back Wednesday, saying the commission’s order already protects customers while allowing Michigan to compete for business investment.

“The attorney general’s challenge has no merit,” said Kelly Hall, Consumers Energy’s senior vice president of regulatory and legal affairs. “The MPSC’s order last month creates a useful framework as Michigan grows and attracts new jobs and tax revenue for local communities.”

Lauren Snyder, the company’s senior vice president and chief customer officer, went further, calling Nessel’s position “anti-investment.”

“When businesses grow, families have more choices — better jobs, stronger schools, and thriving communities where people want to live and stay,” Snyder said.

Consumers Energy argues that large customers will actually help reduce costs for everyone by spreading the utility’s fixed expenses across more users. The company said these customers will “pay their full cost of service.”

Under the commission’s November order, large energy users must:

Sign 15-year contracts with automatic five-year extensionsPay for at least 80% of their contracted energy regardless of actual usePay exit fees if they leave earlyPost collateral equal to half their potential exit fee

The commission also said it would review applications for new large customers individually to ensure they don’t shift costs to other ratepayers.

The Michigan Public Service Commission will decide whether to grant Nessel’s request for a rehearing. The dispute comes as Michigan competes with other states to attract data centers, which require massive amounts of electricity to power servers that store and process digital information.

Nessel is also currently opposing the speed at which a proposed data center project in Saline Township is being moved forward. In early December, Michigan Governor Gretchen Whitmer announced her support of the proposed data center, saying “time is of the essence.” Nessel responded to the proposal as well, urging the MPSC to slow down and hold full, contested hearings on the project.