State regulators change We Energies’ data center rate proposal to protect customers

The Public Service Commission of Wisconsin (PSC) has unanimously approved a landmark special rate plan for large data centers served by We Energies, marking a first-of-its-kind framework in the state. The decision aims to establish how hyperscale data centers will cover the costs of their electricity consumption and the necessary infrastructure. Before giving their approval, the PSC introduced several modifications to We Energies' original proposal, specifically designed to protect existing residential and business customers from subsidizing these large industrial users. This regulatory action comes as data centers in locations such as Mount Pleasant and Port Washington are projected to significantly increase We Energies' energy demand, potentially doubling it by 2030. PSC Commissioner Kristy Nieto underscored the far-reaching implications of the ruling, stating, "The decisions we're making here today will not be limited to this docket. They will shape future proceedings, future investments and the trajectory of the utility system itself." PSC Chair Summer Strand emphasized the commission's intent to prevent cost-shifting to non-data center customers, asserting that "existing Wisconsin customers should not pay a single cent to subsidize the service of data centers." The approved modifications include extending data center agreements with utilities from 10 to 15 years, lowering the energy demand threshold for mandatory coverage under the plan from 500 to 100 megawatts, and eliminating a "capacity-only" subscription model that was deemed risky for other ratepayers. While We Energies initially framed its proposal as a protective measure, critics, including the Sierra Club’s Wisconsin Chapter, argued it did not go far enough, with over 2,000 public comments expressing concerns about rising electricity costs. Following the decision, groups like Clean Wisconsin and the Citizens Utility Board of Wisconsin praised the PSC for being responsive to public concerns. Microsoft, which is developing a data center campus in Mount Pleasant, welcomed the approval. Jeff Riles, senior director of energy markets for Microsoft, stated the company is committed to paying its full share and that the new tariffs provide a clear path for continued investment in Wisconsin while protecting other ratepayers. We Energies spokesperson Brendan Conway also affirmed that the plan "ensures that no costs to serve data centers will be subsidized by, or shifted to, other customers." The PSC is expected to rule on a similar proposal from Alliant Energy regarding Meta’s data center campus in Beaver Dam later this spring.