Data center ruling sends ‘big message’ on who pays for energy use

The Wisconsin Public Service Commission (PSC) has established a landmark precedent regarding the energy costs of data centers, ruling that utility customers should not subsidize these large facilities. The decision, which came after a six-hour debate on a case brought by We Energies, mandates that tech companies developing data centers in Wisconsin's We Energies service area must cover 100% of their energy generation costs. This modifies We Energies' initial proposal for a "very large customer" tariff, which had suggested companies pay 75% of costs and set a higher usage threshold. Commissioner Kristy Nieto emphasized that the commission aims to ensure data center customers pay their full, transparent share, shielding existing Wisconsin customers from any subsidy. This ruling is seen as a significant victory by utility watchdogs and environmental groups, addressing widespread concerns among residents about the potential for increased utility bills and environmental strain from data center developments. The PSC's decision is expected to influence future data center proposals across the state, including an upcoming case involving Alliant Energy and Meta's new data center in Beaver Dam. Tom Content, executive director of the Citizens Utility Board of Wisconsin, stated that the ruling sends a clear message that wealthy tech companies are expected to bear the full cost of their projects. Utilities planning to power data centers will likely need to adjust their proposals to align with these new restrictions.