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Michigan PSC approves large-load tariff for data centers, sets 15-year contract and collateral rules
Summary
The Michigan Public Service Commission on Nov. 6 approved an order (U-21859) that creates a new tariff for very large electric customers including data centers, requiring minimum 15-year contracts, an 80% minimum billing demand, exit fees and default collateral to limit cost shifts to other customers.
The Michigan Public Service Commission voted unanimously on Nov. 6, 2025 to approve an order (case U-21859) establishing a new tariff for very large customers — including data centers — aimed at protecting other ratepayers from stranded costs and cost shifting.
Commissioner Myers said the commission set a 15-year minimum contract “due to it being approximately the life of an investment that will need to be made” to serve such customers, and the order requires a minimum billing demand of 80% and an initial contract term of 15 years. The tariff applies to any large-load customer with a minimum service threshold of 100 megawatts and includes a ramp-up option of up to five years and a one-time capacity reduction of up to 10% with four years’ written notice.
Under the order, customers leaving service before a contract ends must pay an exit fee equal to the minimum monthly bill multiplied by the remaining months on the contract; the order sets a default collateral requirement equal to half the exit fee. Consumers Energy must make an ex parte filing before each large-load customer takes service showing compliance with tariff requirements, demonstrating that the costs caused by the customer are not being subsidized by other customers and providing details on how the utility will serve the load (generation, storage or other resources). The commission said it will endeavor to decide those filings within 90 days.
David Isacson, who presented the order, told commissioners Consumers had received inquiries for more than 15 gigawatts of potential new data-center load and that the scale of the proposed additions warranted new protections to ensure other customers do not bear new costs.
Commissioners framed the order as an attempt to balance economic development and customer protection. Commissioner Peric emphasized the need to prevent over-optimistic assumptions about future load from leaving existing customers with stranded costs; Chair Dan Scripps said the tariff provides flexibility, including ramping and the potential for special contracts when a data center or other large-load customer agrees to cover required additional costs.
Public commenters during the meeting’s public-comment period raised concerns about data centers’ local impacts and potential rate effects. A caller (phone ending 0558) asked how a proposed data center would increase load “by 25% without raising customer prices” and asked about the project’s footprint. Brian M., identifying himself as a tech-industry worker from Ann Arbor, said policy protections are important and added that, in his view, the current AI-driven data-center boom “is a bubble” and cautioned against leaving the state to cover long-term costs if projects fail.
The order also directs Consumers Energy to file multiple cost-of-service and rate-design proposals to analyze large-load customers’ impacts and contribution to interconnection costs, and to provide annual reporting on aggregated large-load demand, energy use, capacity changes and exit fees.
The commission voted unanimously to approve the order in case U-21859. The order and an issue brief will be posted on the commission’s website under docket U-21859.
