Francesca Pica
An unlikely ally joined consumer advocates in raising concerns about a plan to shield Wisconsin energy customers from transmission costs related to Mount Pleasant's data center campus.
Microsoft disputed American Transmission Co. and We Energies’ proposal to bill the tech company over $600 million for new power lines and substations serving its Mount Pleasant data center campus – saying it doesn’t go far enough to protect existing customers' electric bills.
ATC is planning more than $2 billion in new high-voltage power lines, substations and facility upgrades to deliver power to large data centers. ATC charges these costs to utilities like We Energies, which then pass them along to their customers through energy bills.
Under ATC’s proposal submitted to federal regulators in July, We Energies would pay the total cost of transmission capacity a data center requests “even in the event the end-use data center customer fails to materialize or take 100% of the requested service.” Microsoft must then pay the utility back in full.
But in an Aug. 21 public filing, the tech giant said it was not consulted about the agreement despite being its sole customer.
“As a result, the Agreements predictably contain significant deficiencies — errors, contradictions and inconsistencies — and raise several significant cost-of-service and open access issues that support a Commission finding that the Agreements may not be just and reasonable,” the company wrote.
Furthermore, Microsoft said the agreement “provides no mechanism to prevent [We Energies’] retail customers from paying the costs of the facilities, and large load customers may pay twice.” It emphasized its commitment to President Donald Trump's ratepayer protection pledge, which holds that U.S. households should not be subject to utility price hikes caused by data center development.
Consumer protection group CUB supports Microsoft's position
The Citizens Utility Board echoed Microsoft’s concern in filings submitted the same day. The consumer advocate told federal regulators the agreement lacks clarity about how transmission costs are tracked and assigned to customers.
“The giant customer and the small customer are aligned in raising questions about how these costs are allocated,” said Tom Content, CUB’s executive director. “We can’t tell from this filing if the numbers they used to allocate costs to Microsoft are accurate.”
Content warned that without adequate protections, five million ATC customers in eastern Wisconsin and Michigan’s Upper Peninsula could be stuck paying for data centers’ power lines.
ATC told the Milwaukee Journal Sentinel in a statement it's "reviewing Microsoft’s filing and will respond through the established FERC process to demonstrate that existing customers are fully protected by the agreements."
"We remain committed to cost transparency and protection of existing customers while ensuring reliable transmission service," the company said.
Microsoft requested that the Federal Energy Regulatory Commission meet with parties to resolve the “deficiencies,” or otherwise reject ATC’s plan so it must renegotiate.
Power line company's plan 'premature,' consumer advocate says
ATC says Mount Pleasant’s agreement is the first of many that will directly assign data center-related transmission costs to the tech companies that own them. Additional projects in the utility's service area include Vantage Data Centers’ $15 billion campus in Port Washington and a data center in Beaver Dam owned by Meta.
But Content said individual contracts with tech companies are the wrong approach.
“They’re proposing one thing for Microsoft, and there’ll be another agreement in Port Washington and another for Beaver Dam,” he said. “You should have a consistent framework” that applies the same standards to all projects, similar to the rate structure approved for We Energies in April.
ATC told the Journal Sentinel in July that individual project agreements are in line with its past filings as well as data center plans from transmission owners in other states. The rules for wholesale utility companies like ATC are different, the company added.
“Our agreements are going to be very similar among all of our customers,” said Ellen Nowak, ATC vice president of regulatory and government affairs. “It's just going to be different inputs, and we have to treat all of our customers similarly and equally.”
Content also called ATC’s filing “premature,” since FERC expected to set more robust frameworks for transmission cost allocation later this year.
In June, the agency ordered regional grid operators to show how data center-related costs are tracked and shielded from ratepayers. Wisconsin’s grid operator has until Nov. 16 to respond – and potentially scramble ATC's plan.
The Public Service Commission, Wisconsin's utility regulator, also said in public comments that while an improvement over the status quo, ATC's plan fails to fully address FERC's concerns.
“Additional work is needed to achieve just and reasonable transmission rates,” the utility regulator said.
ATC said the agreement offers “the protections that the Commission is seeking in a fair, just, and reasonable manner.”
Francesca Pica can be reached at fpica@usatodayco.com.
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