Oracle sues Wisconsin utility regulators over financial requirements for data centers

Tech giant Oracle has filed a lawsuit in Ozaukee County Circuit Court against the Public Service Commission of Wisconsin (PSC), seeking to overturn new financial requirements imposed on data center developers. The lawsuit, filed by an Oracle subsidiary, argues that these stringent credit rating and collateral requirements will force significant investment outside Wisconsin, potentially costing the company over $100 million annually.

The PSC had approved a "very large customer" rate in April but strengthened the financial support requirements, mandating an A- credit rating from S&P or A3 from Moody's. Oracle, which holds a BBB rating, claims this forces it to post substantial letters of credit or cash deposits. Julia Robin, Oracle's Vice President of Infrastructure Capacity and Sourcing, stated in an affidavit that these are among the most stringent requirements globally.

Meanwhile, We Energies, Vantage Data Centers, and Cloverleaf Infrastructure have also petitioned the PSC to revisit these requirements, which they say add significant costs. Environmental group Clean Wisconsin and the Citizens Utility Board (CUB) have defended the PSC's decision, arguing it protects ratepayers from the risks associated with massive energy users like data centers, especially given the anticipated doubling of electricity generation capacity in Wisconsin due to AI data centers. CUB's executive director, Tom Content, also highlighted concerns about a potential AI bubble and Oracle's debt load. Oracle has offered to post a $700 million letter of credit and indicates it would halt court proceedings if the PSC reconsiders its decision.