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

The Wisconsin Public Service Commission (PSC) has unanimously approved a significant new rate structure, mandating that large data centers served by We Energies bear the entire cost of new power plants, solar farms, and fuel required for their operations. This landmark decision, among the first of its kind in the Midwest, is designed to shield existing Wisconsin customers from subsidizing the substantial energy demands of data centers, a point emphasized by Commissioner Kristy Nieto. The new agreement modifies We Energies' initial proposal, which would have allowed data centers to pay only three-quarters of the cost of new generators, with other customers covering the remainder and fuel expenses. This revised structure comes after a year of negotiations involving ratepayer advocates, data center developers, and the PSC, which regulates state utilities. Ratepayer advocates and clean energy groups had previously argued that We Energies' original plan would impose unfair costs and risks on current customers. The policy will impact major projects across eastern Wisconsin, including upcoming data centers for Vantage in Port Washington and Microsoft in Mount Pleasant, which PSC Chair Summer Strand indicated could consume electricity comparable to a mid-sized metro area. The Midcontinent Independent System Operator (MISO) projects a need for twice the current rate of new generation capacity in the Midwest within five years, primarily to accommodate the escalating power requirements of new data centers.