OpenAI and Oracle are building a massive data center in Michigan — and residents’ power bills are hinging on it.
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The data center is part of OpenAI’s Stargate project, originally a joint venture between Oracle, SoftBank, and OpenAI. If it performs as expected, the Michigan electric utility DTE Energy says it will freeze rates for its entire customer base.
Driven largely by Big Tech’s sweeping AI data center buildout, electricity bills are rising nationwide. DTE is one of many local utilities that have sought to raise customer rates across the board as it builds new power plants and transmission lines to keep up with unprecedented demand.
DTE expects the 1.4 gigawatt data center campus, a $16 billion Oracle-backed project meant for OpenAI, to generate an additional $300 million in savings, allowing it to keep customer bills steady.
OpenAI will have to use enough electricity to generate that revenue. DTE Energy said in a Michigan Public Service Commission filing this week that it will pause rate hikes for at least two years if the data center comes online as scheduled.
OpenAI may be struggling to meet its targets as it prepares for an IPO. The Wall Street Journal reported this week that the company fell short of its goal to reach 1 billion weekly active users last year, and CFO Sarah Friar warned executives that OpenAI needs to grow revenue to keep up with its massive data center spending.
Meanwhile, consumer advocates and public officials — including President Donald Trump — are calling on utilities, regulators, and Big Tech to ensure that residential homeowners and small business owners don’t bear the burden of the buildout costs.
Michigan’s utility asked for rate hikes
DTE says it will need to spend tens of billions on new infrastructure to power Oracle and OpenAI data centers.
It’s also asking state regulators to approve a plan that would raise its average customer bill by 9.7% monthly, nearly triple the pace of inflation, beginning next year.
It’s a significant hike, though the utility says it could also be the last increase its customers will have to absorb in the near future, thanks to the additional revenue from data centers.
“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,” DTE president and CEO Joi Harris said in a press release last week.
Oracle and OpenAI face hurdles
Many factors could foil this plan.
Data center projects face rising opposition from local Michigan communities, including in Saline Township, where Oracle and OpenAI plan to build their data center. Construction delays due to labor, power, and equipment shortages also slow development.
Oracle also faced challenges securing financing for its data center projects. This week, Related Digital finalized its agreement to back Oracle’s Michigan data center, with help from Blackstone and Pimco. The site is part of OpenAI’s Project Stargate and has been in the works for months.
Michigan Attorney General Dana Nessel slammed the utility’s move to tie a potential rate freeze to the performance of a data center, citing the many unknowns surrounding Oracle and OpenAI’s Michigan site and other massive AI data centers planned across the country.
“This isn’t a commitment — it’s a ransom note,” Nessel said this week in a press release.
Nessel said she is skeptical of DTE’s claim that the additional revenue the utility gets from its data center customers will help keep bills affordable for everyone. Her office has filed an appeal of DTE’s data center contracts with Oracle and Google’s data center in another part of the state.
“DTE cites ‘affordability benefits’ associated with their secret data center contracts that have never been proven, or even reviewed by consumer advocates,” Nessel said.
