Saline Township gets $14M in settlement after rejecting data center rezoning

A Michigan township just settled for the right to lose. Saline Township, a community of roughly 2,000 people south of Ann Arbor, voted 4-1 to reject rezoning in September 2025. Two days later, Related Digital sued. By the time the litigation ended, the township had secured roughly $14 million in community benefits: more than 10 times its roughly $1 million annual budget, but insufficient to stop a project whose state-certified power contracts had already made the outcome inevitable, Fortune reported May 6.

The mechanism is MCL 460.6a(3), a provision in Michigan utility law that lets the MPSC certify a take-or-pay power contract as serving the public interest, bypassing the contested-case process that would give advocates and the public a hearing. Under the federal Powerplant Act and Michigan utility code, that certification carries legal weight local zoningOverlay ordinances cannot easily override. A township board can reject a rezoning request. It cannot undo a state-certified take-or-pay contract obligating the utility to provide capacity to a specific customer. Once the MPSC approved the DTE-Oracle contracts on December 18, 2025, over objections from Attorney General Dana Nessel, Sierra Club, the Michigan Environmental Council, Natural Resources Defense Council, and the Citizens Utility Board of Michigan, the legal weight had already shifted. The local fight became a settlement negotiation, not a veto.

Michigan's courtship of the project predated the public record. Governor Gretchen Whitmer met virtually with OpenAI CEO Sam Altman in the spring of 2025 to discuss bringing the Stargate site to Michigan, Fortune reported. The state moved quickly to accommodate it.

The Stargate Michigan campus is now financed. Related Digital closed $16 billion in financing on April 24 with backing from Bank of America, Blackstone, and PIMCO, the company said in a press release. Construction began in the first quarter of this year and is targeting completion by the end of 2027, Engineering News-Record reported. At full buildout, the facility will draw roughly 1,383 MW — more than 10 percent of DTE Energy's projected 2026 system peak of 10.71 GW.

DTE's case is not without merit. The utility argues that the must-pay clause is precisely what protects ratepayers: because the data center guarantees revenue regardless of how much electricity it actually draws, the project adds a large, creditworthy customer to the grid without spreading fixed costs to residential users. Under this reading, the take-or-pay structure is a risk-allocation mechanism that puts the data center's capital commitments where they belong. The $14 million community benefit package delivered real money to a township whose roads and services have been structurally underfunded for years. DTE further argues that without the expedited review path, regulatory delay could have pushed the data center to another state, costing Michigan the investment entirely.

But independent analysts have identified the concentration of that load at peak moments as a structural exposure. Lee Shaver, senior energy analyst at the Union of Concerned Scientists, has warned that data centers drawing from grids already near capacity can create congestion on power lines, require new power plants, and drive up costs for other ratepayers — a dynamic that applies directly to the Saline facility, Shaver told Planet Detroit. Chris N. Hall, assistant director of the Citizens Utility Board of Michigan, has noted that without a contested-case proceeding, advocates had no opportunity to review the specifics of the contracts or verify DTE's claims that new costs would not spread to residential customers — the documents were approved in redacted form, CUB documented in its MPSC filing. UCS's January 2026 analysis estimated that absent stronger ratepayer protections, data center load growth could put Michigan ratepayers at financial risk of $18 billion in additional electricity system costs over 25 years.

This contract structure is not unique to Michigan — it is becoming the national template. Regulators in Kansas approved a large load tariff for Evergy in late 2025 incorporating minimum contracting terms and 80 percent take-or-pay requirements. Michigan regulators did the same for Consumers Energy. Duke Energy has announced plans to add 13 gigawatts of data center load under take-or-pay arrangements, Dominion Energy has 9.8 gigawatts in similar electric service agreements, and American Electric Power brought two gigawatts online in the third quarter of 2025 alone, Latitude Media reported. The model has become the industry's preferred mechanism for managing the mismatch between data center timelines — measured in months — and power infrastructure lead times — measured in years. Every utility with a strained grid and a data center applicant has the same incentive: lock in the commitment, pass the capacity cost to the counterparty, and avoid the contested-proceeding publicity that could derail the deal. The Saline playbook is not a Michigan peculiarity. It is the instruction manual.

The rate implications are concrete. DTE filed a request on April 28 seeking permission to raise electric rates by approximately $474.3 million annually, a 9.7 percent increase for residential customers, according to the Michigan Attorney General's office. If approved as filed, the average residential bill would increase by $11.06 per month, DTE said in its rate filing. The connection between the Saline data center and the rate case is direct: DTE told the commission it might forgo the 2027 rate increase if the facility comes online without delay. Michigan Attorney General Dana Nessel called that framing "a ransom note." The MPSC's contract approval is now under appeal to the Michigan Court of Appeals.

The political texture at the local level runs parallel to the legal fight. The recall targets Supervisor James Marion, Clerk Kelly Marion, and Trustee Tom Hammond, according to MLive. But the dynamics are counterintuitive. Supervisor James Marion voted against the settlement and is the target for that. Trustee Tom Hammond also voted against the project and declined to comment on pending litigation. Clerk Kelly Marion was the lone official who voted in favor of pursuing the settlement that paved the way for the data center — and she is also a recall target. E. Frederick Gall, the resident who filed the petitions, has said he disagreed with her decision to support the settlement rather than continue fighting. The Washtenaw County Election Commission voted 2-1 in May to reject recall petition language against Kelly Marion and Hammond, finding it insufficiently specific about which lawsuit it referenced; Gall said he plans to revise and refile. This reporter reached Kelly Marion and E. Frederick Gall for comment; neither responded before publication.

The outcome of the Michigan Court of Appeals case will determine whether the power-as-moat model holds. If the panel upholds the MPSC's contract approval, the legal front closes and the playbook — state utility approval preceding and precommitting local land use — is confirmed for the next project. If it reverses or remands, the power agreements go back for a contested hearing, and every Michigan community where a data center is next proposed has a procedural argument to make.

The data center is not the only showdown. The take-or-pay tariff model is under regulatory review in multiple states simultaneously, as utilities and grid operators attempt to manage the credit risk of counterparties committed to billions in minimum payments over 15-to-20-year horizons. Experts have noted the inference services market remains unproven at scale, and that any correction could leave utilities and ratepayers holding infrastructure built for demand that never materializes. The Saline project sits at the intersection of all of these questions — a test case for whether the grid can absorb the AI boom without passing the costs to the people who never voted for it.