Wis. regulators: Data centers must cover full cost of their energy needs

The Wisconsin Public Service Commission (PSC) unanimously approved a new payment structure for large data centers on Friday, designed to ensure these facilities, served by We Energies, bear the full cost of their energy demands. This precedent-setting agreement, one of the first of its kind in the Midwest, mandates that data center operators, including Vantage in Port Washington and Microsoft in Mount Pleasant, cover the entire expense of new power plants, solar farms, and fuel needed for their operations. The decision diverged from We Energies’ initial proposal, which would have required data centers to pay only three-quarters of new generation costs, leaving existing customers to cover the remaining quarter and fuel. PSC Commissioner Kristy Nieto emphasized that "existing Wisconsin customers should not pay a single cent to subsidize the service of data centers," a sentiment echoed by ratepayer advocates and clean energy groups like the Sierra Club of Wisconsin. They argued that We Energies' original plan would have unfairly burdened ratepayers with costs and risks, especially given the "mid-sized metro area" electricity consumption of new data centers, as highlighted by PSC Chair Summer Strand. While the new structure aims to protect ratepayers from generation costs, the issue of transmission costs remains partially unresolved. American Transmission Company (ATC), in which Wisconsin utilities hold a majority stake, is responsible for the necessary transmission infrastructure buildout. PSC Commissioner Marcus Hawkins noted that existing customers are projected to pay tens of millions for data center-related transmission infrastructure by 2028. Although the PSC implemented a "temporary stopgap measure" requiring a minimum payment for transmission based on projected energy needs, discussions between ATC and data center operators are ongoing to limit rate hikes for other customers. Both We Energies and ratepayer advocates, including the Citizens Utility Board of Wisconsin, welcomed the PSC's decision as a significant step towards ensuring data centers pay their fair share.