July 02, 2025

Testimony: Consumers Energy Needs a Smarter Plan for Data Centers

With the right incentives and guardrails, data centers can drive the clean energy transition.

By Daniel Abrams, Senior Associate Attorney

Large-load electric customers like data centers are starting to knock on the door of Consumers Energy — the public utility serving much of Western Michigan — with applications to connect to its grid. In total, these data centers have asked for as much as 15 GW of potential new demand by 2035. For context, that’s roughly double Consumers Energy’s peak load of 2024.

Take that number with a grain of salt – not all those requests are expected to materialize. However, Consumers Energy still assigns a high probability to seeing about 2.65 GW of large new loads by 2035 – a big jump in a very short time.

This surge in demand poses a tough planning and policy challenge. Michigan’s clean energy laws require utilities, such as Consumers Energy, to meet increasing percentages of their electricity sales with renewable and clean energy sources. But these targets are measured as a percentage of total electric load. Therefore, if the total load skyrockets due to data center growth, so does the total amount of renewable energy that Consumers Energy needs to procure.

Meeting that increased demand while accelerating renewable procurement to comply with Michigan law has cost and planning implications for both the utility and its customers.

Why ELPC Testified

Right now, Consumers Energy is proposing changes to the “General Service Primary Demand rate,” or Rate GPD, that would apply to new large load customers like data centers. This is a key opportunity to address how incoming large users impact the grid and ensure they contribute to Michigan’s clean energy goals.

That’s why ELPC testified on behalf of The Ecology Center, Union of Concerned Scientists, and Vote Solar. We’re urging the state to make sure new data centers don’t just take power from the grid – but bring their own clean energy to the table, too.

Handled correctly, data centers do not have to be a roadblock to meeting our clean energy goals. Many of the tech companies building these centers have ambitious climate and clean energy goals. With the right incentives and guardrails, they can become drivers of the clean energy transition.  

READ ELPC’S EXPERT WITNESS TESTIMONY

Consumers Energy plans to wait until the 2026 Integrated Resource Planning (IRP) to begin addressing the renewable energy needs driven by data center load growth. The new energy authorized in that process may not come online until many years after 2026, jeopardizing Consumers Energy’s compliance with its clean energy requirements. This could lead to rushed procurements, higher costs, and greater risks for Michigan customers down the road.

What the Commission Should Do

Consumers Energy has already proposed some initial protections — such as contract minimums, upfront and exit fees, and penalties for exceeding contracted capacity. These are a good start. But the MPSC should go further with these four proactive steps:

1. Require clean energy sourcing plans from data centers

Before receiving service, data centers should demonstrate how they plan to source clean energy. This could include on-site solar and storage, demand flexibility strategies like demand response, or signing up for Consumers Energy’s renewable energy program (Voluntary Green Pricing, or VGP).

2. Prioritize clean energy commitments

Consumers Energy should prioritize interconnection applications that come with clear, verifiable clean energy sourcing plans, reducing the burden (and cost) on the broader system. This encourages data center customers, most of whom already have ambitious clean energy and net-zero goals, to bring their own clean energy.

3. Make full use of existing programs

Consumers Energy has a voluntary renewable energy program (the VGP) that allows customers to buy new, time-matched clean energy. The new Rate GPD Tariff should include a clear pathway for data centers to opt into this or similar program as a way to bring clean energy online without shifting costs to households and small businesses.

4. Require ongoing accountability

Once data centers are online, the Commission should require them to provide regular updates showing progress toward their clean energy goals, so that commitments don’t evaporate after approvals are granted.

These recommendations would ensure that the additional costs and risks of serving new data centers – new power plants, transmission upgrades, and clean energy procurement – do not fall on regular customers already struggling with high energy costs.

If the MPSC adopts these recommendations, data centers can help accelerate Michigan’s clean energy future, not derail it. But if the Commission ignores these issues until 2026, Michigan won’t meet its clean energy goals and data centers will not pay their fair share of the costs. Michigan cannot afford to wait.