Michigan Approves Powering Oracle (ORCL.US) and OpenAI Data Centers Through Controversial Agreement with Regulators

The Zhitong Finance App has learned that Michigan regulators have unanimously approved the utility company DTE Energy Co. A request to provide electricity for a large-scale data center project planned by Oracle (ORCL.US) and OpenAI. At this controversial hearing, some members of the public expressed strong opposition to the project.

DTE previously requested regulators to expedite approval of its power supply plan to support the multi-billion dollar 1.4 gigawatt facility in Saline Township (Saline Township). On Thursday, every regulator said the contract drawn up between utility companies and technology companies protects the power grid and the general public.

Michigan Public Service Commission Chairman Dan Scripps said, “These agreements show net financial benefits to DTE's other customers.” He added that the agreement requires the technology company to provide upfront collateral, and “the contract does not presuppose that the customer will remain financially solvent at all times.”

The rapid expansion of US data centers has transformed the energy industry, and controversy is growing as these facilities may consume as much electricity as an entire city. The clashes at Thursday's hearing highlighted the increasingly hostile environment for data centers in parts of the US.

According to a document submitted by DTE, the agreement between DTE and Oracle would allow the tech company to cover most of the costs of the project. This will also include a minimum monthly charge and termination fee. People familiar with the matter previously told Bloomberg News that the developers are financing the project through an approximately $140 billion debt deal.

Citigroup notes that the regulatory approval process is fraught with controversy, and that the hyperscale cloud computing giant will be the first to be powered off in a state of emergency. “This should help avoid the potential scenario of 'the Oracle data center is brightly lit and the public is experiencing a power outage',” the analyst wrote in a Thursday briefing.

OpenAI said the “Stargate” site in Salin Town is part of its planned 8-gigawatt capacity in the US and part of its previously announced investment of more than 450 billion US dollars over the next three years with its broader “Stargate” partners. One gigawatt of electricity is equivalent to a conventional nuclear reactor.

A representative of DTE said in a statement that the utility company is responsible for providing services to all customers within its jurisdiction, including data centers. “We acknowledge that there are various opinions and feelings about this decision,” the statement said.

Oracle says the data center will bring financial benefits and taxes to Michigan schools and towns. In a statement, it said the regulatory approval ensured that Michigan customers were protected from rising electricity prices.

During the hearing, many opponents stood in front of the podium to express their concerns.