We Energies on Monday proposed a special electric rate aimed at data centers including the Microsoft center under construction in Mount Pleasant and a proposed facility in Port Washngton.
The rate is meant to ensure that other ratepayers are not saddled with costs associated with building power plants and electric infrastructure necessary for power-hungry data centers, according to the state's largest utility.
The rate could apply to other very large industrial We Energies customers in Wisconsin, although it was essentially written for data centers which are in a league of their own when it comes to power consumption.
Data centers house thousands of computers, in one or more buildings, linked to the outside world by fiber optic cables. They enable most everyday online activities, including social media, streaming video, banking, ChatGPT and much more.
Most people think of data centers, collectively, as “the cloud.” If all data centers suddenly went dark, you'd quickly notice — you couldn't stream movies, use online documents, or access social media, for example.
The first phase alone of Microsoft’s data center in Mount Pleasant will likely require the same amount of electricity needed to power more than 300,000 homes, according to information obtained by the Journal Sentinel earlier.
Put into context, the City of Milwaukee has around 262,000 housing units.
Goal is to have owners of data centers pay for the power they need
The new electric rate would have nine billing determinants, according to the PSC filing.
One of them is an administrative charge which includes a fixed cost of $213,118 per billing period plus the variable cost of $305 per megawatt of Maximum Customer Demand per billing period. This monthly charge covers the full personnel and overhead costs dedicated to serving any new VLC (very large customer), the filing says.
"Under this (rate) proposal, very large customers such as data centers will have access to reliable power to meet their needs. These large customers will directly pay for the power they consume, along with costs of the power generation plants and distribution facilities built to serve them," We Energies said in a statement.
"We have worked for several months to develop a proposal that ensures that all of our customers are protected. We designed the rate to make sure no costs to serve these new customers will be subsidized by, or shifted to, other residential or business customers. This is important to us and to the very large customers we have been working with — they are committed to paying their fair share," the statement said.
The rate proposal now goes to the state Public Service Commission for its consideration, a process which will likely take months and involve public hearings before a decision is made.
"It's good to see this finally reach the light of day. The fact is, this should have been the first application proposed to the state PSC, not the $2.2 billion in natural gas plants that it applied for -- the same application that led to six hours of testimony and a PSC hearing ending with people still waiting to speak out on the project," said Tom Content, executive director of the nonprofit Citizens Utility Board of Wisconsin.
"The Wisconsin Legislature granted discounted energy rates to Foxconn, and by extension, to Microsoft for locating in the information technology zone in Racine County. That's why we appreciated Microsoft's pledge to pay its fair share for the assets needed to serve its project -- but we need more specifics. Today we're seeing some of those details emerge for the first time," Content said.
"The PSC must ensure there is a robust analysis and a transparent process to evaluate this proposal — to ensure that it lives up to the commitments that We Energies is making, and that Main Street businesses, homeowners and renters won't be subsidizing a big data center," he added.
Microsoft has said it would pay its share of costs
Microsoft has said it's working with We Energies to bring to the power grid new sources of electricity equal to the amount the Mount Pleasant data center will use without leading to an increase in the price of electricity for its neighbors.
Even if Microsoft walks away from a Wisconsin data center years from now, the company says, it would still be responsible for any costs incurred by We Energies for the forecasted energy load.
“We don't take those investments lightly,” a Microsoft spokesman said Monday.
However, data centers have been the focus of critics who say We Energies is using them as an excuse to build a $1.2 billion gas-fired power plant in Oak Creek where the current coal power plant will be shut down.
Critics have said air quality in southeast Wisconsin and beyond would worsen from hundreds of thousands of tons of carbon dioxide emitted annually. The burning of natural gas, also called methane, emits pollutants that contribute to respiratory and cardiovascular diseases.
Also, as data technology evolves, the energy usage could decrease significantly. There’s a risk of how much of the demand for data centers will actually materialize in Wisconsin when many states are bidding for the projects.
"With all the hype, there's a fever pitch where there will be a lot more data center announcements than there are actually going to be data centers built," said Content with Wisconsin's CUB.
"So, we're concerned about where does rhetoric meet reality? In recent months we've seen technological advancements in AI questioning how much energy will be needed, we've seen uncertainty given Microsoft with pauses in construction, and we've seen widespread opposition to the natural gas projects. All this creates a very uncertain time for the state to be making billion-dollar decisions about power plants that are built to last generations," he added.
Earlier in March, without explanation, Microsoft paused construction on expansion sites for the Mount Pleasant location.
However the company says its commitments to Wisconsin have not changed and that it supports the proposed special electric rate.
“Microsoft is committed to being a responsible neighbor in Wisconsin. As we continue to develop a $3.3 billion data center campus in Mount Pleasant, the draft tariffs submitted to the Public Service Commission will ensure we are protecting other rate payers, paying our own way, and ensuring energy needs are met throughout the state," Bobby Hollis, Microsoft's vice president of energy, said in an email Monday to the Journal Sentinel.
Other states are weighing special electric rates for data centers
Nationwide, there are growing concerns about the power and water demands of data centers that are being built as part of the next generation of technology based on artificial intellience needs.
Oregon and other states are considering legislation that would require large energy users, such as data centers, to pay their share for power generation.
"The demand for energy is growing rapidly in Oregon, mainly from data centers and other big tech," the Oregon Citizens Utility Board says on its website.
"This mass influx of very large energy users is putting a strain on our energy system and driving up costs for everyone. We’re already seeing the impact of large energy users not paying their share. As we have seen significant growth in data centers, we have seen big increases in energy bills," Oregon's CUB says.
This story has been updated with new information.
From: https://www.jsonline.com/story/money/business/energy/2025/03/31/we-energies-proposes-making-microsoft-pay-for-data-center-power-needs/82745999007/
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