Wisconsin utility regulators review plans for how to pay for data center energy needs

Microsoft’s new AI data center campus in Mount Pleasant, Wis.
(Microsoft graphic via Canary Media)

Utility regulators in Wisconsin are scrutinizing the state's first energy plan to power AI campuses. Meanwhile, consumer and environmental groups dispute the need and consumer benefits for supporting data center developments.

The biggest debate right now is how much of their energy infrastructure costs data centers will be required to pay. Kari Lydersen of Canary Media reports, "Wisconsin’s largest utility, We Energies, has offered its first major proposal before state regulators on the issue."

The proposal, which is open for public comment, contains two options for data centers to choose from, both of which outline that "data centers would pay most or all of the price to construct new power plants or renewables needed to serve them," Lydersen explains. The first option, defined as "full benenfits" requires data centers to fund 100% of their needs. The second option, called "capacity only," requires data centers to pay 75% of their costs. "Other customers would pick up the tab for the remaining 25%."

The We Energies decision is also likely to set a precedent for other Wisconsin utilities managing data center energy plans. Bryan Rogers, the environmental justice director for the Milwaukee community organization Walnut Way Conservation Corp, told Lyderson, "As goes We Energies, so goes the rest of the state.”

Consumer and environmental groups are speaking out against the capacity-only option, arguing that "it is unfair to make regular customers pay a quarter of the price for building new generation that might not have been necessary without data centers in the picture," Lyderson writes.

We Energies says "everyone will benefit from building more power sources," Lyderson reports. Jeffry Pollock, a Wisconsin Industrial Energy Group trade adviser, told regulators that "the utility’s own modeling of the capacity-only approach showed scenarios in which the costs borne by customers outweigh the benefits to them."

Although Wisconsin has seven big data centers under construction, the state "has no laws governing how the computing facilities get their power," Lyderson writes. Wisconsin lawmakers are debating two bills that define data center energy division, but "until a measure is passed, individual decisions by the state Public Service Commission will determine how utilities supply energy to data centers."