We Energies Asking State Utility Regulators to Approve Special Rates for Data Centers

Saturday, April 5th, 2025 -- 8:01 AM

(Joe Schulz, Wisconsin Public Radio) We Energies is asking state utility regulators to approve special rates for data centers that would require those users to pay for infrastructure built for their developments.

According to Joe Schulz with the Wisconsin Public Radio, in an application with the Public Service Commission of Wisconsin this week, the utility outlined rate proposals for customers that are expected to need enough energy to power hundreds of thousands of homes each year.

It’s the first attempt to craft a rate structure for data center-scale customers in Wisconsin. Data centers are among the most “energy intensive” types of buildings, using 10 to 50 times more energy per floor space than a typical commercial office building.

Several data centers have been planned within We Energies’ service territory. Microsoft is developing a more than $3.3 billion data center campus in Mount Pleasant, with additional plans for another site in Kenosha.

Data center developer Cloverleaf Infrastructure has another project planned in Port Washington. “The scale of these data centers, the very large customers, are unlike anything we’ve ever seen,” said Dan Krueger, executive vice president of infrastructure and generation planning for WEC Energy Group, We Energies’ parent company.

“They are far in excess of our current largest customers.” Krueger said We Energies’ rate proposal was crafted in partnership with Microsoft and Cloverleaf to ensure that energy infrastructure built to support data centers or other large customers isn’t subsidized by residential or business customers.

Under the proposal, customers with a load of at least 500 megawatts, enough energy to power more than 300,000 homes annually, would agree to be responsible for costs related to new resources that the utility builds to meet their demand.

Resource agreements with those “very large customers” would be “effective for the depreciable life of the resource, except for wind or solar resources which will have a term of 20 years or more,” We Energies said in its application.

Krueger said the rate proposals are designed to ensure large customers are paying for all the energy they use and the costs to deliver that energy. He said it also includes credits based on the infrastructure the customer paid for.

“All the infrastructure built to serve these loads, and all the efforts by this company and all its employees to serve them, are all going to be picked up by these large customers,” he said. “There are no costs from this new economic development that are going to go to the other customers in our system.”

We Energies asked regulators to approve the proposal by the end of the year. The utility has already applied to build new generation resources to support Microsoft and other industrial development in southeast Wisconsin.

The state commission is reviewing plans for more than $2 billion in natural gas infrastructure, including new plants in Oak Creek and Kenosha County.

Beyond paying for infrastructure that serves large customers, the rate plan also allows the utility to curtail energy to very large customers at times when the grid is stressed to ensure reliability, according to a Microsoft spokesperson.

In a statement, Bobby Hollis, vice president of energy for Microsoft, framed the rates, called tariffs in the utility industry, as being part of the company’s commitment 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 ratepayers, paying our own way, and ensuring energy needs are met throughout the state,” Hollis stated.

Tom Content, executive director of the Citizens Utility Board of Wisconsin, said he appreciates that Microsoft has “pledged to pay its fair share” for the infrastructure it needs.

But he said he wished the utility had applied for the rates before the natural gas infrastructure in southeast Wisconsin. “It’s good to see that this has seen the light of day now,” Content said. “But this needs a robust review by the PSC to make sure that it is protective of customers who aren’t the data center companies.”

Environmental groups, meanwhile, criticized the plan for lacking details about the use of clean energy and called for the state to have a larger role in resource planning.

We Energies has pledged to invest $9 billion in renewable energy in the coming years. Krueger said the utility applied for the gas infrastructure before the rates because some equipment needs to be purchased well ahead of construction, and it took months of negotiations to craft a “first-of-its-kind” rate proposal in Wisconsin.

The rate proposal comes as Microsoft has delayed or paused work on data centers across the country, including in Wisconsin. The company has paused work on a 900-acre portion of its Mount Pleasant data center campus.

According to Bloomberg, Microsoft spent $262 million on construction during the first six months developing the project, including almost $40 million spent just on concrete.

In a statement, a Microsoft spokesperson said the company’s “commitments to Wisconsin have not changed” and it is “fully on track” with construction on the first phase of its data center campus.

“It’s still expected to go online in 2026, and our $3.3 billion commitment remains intact,” the spokesperson wrote. “We have expansion sites in Mount Pleasant where we intend to build additional infrastructure, and we’ve already done preliminary work for those future builds.”

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