Energy Rates Under Scrutiny: Wisconsin Data Centers and Customer Costs
Interest groups are closely examining a proposal by We Energies regarding special electric rates for data centers, raising concerns about potential risks to other customers’ utility bills. Analysts for Wisconsin’s Public Service Commission (PSC) and consumer advocacy groups argue that without stronger safeguards, the plan could lead to increased costs for regular households and businesses.
The Proposal and Concerns
We Energies has filed an application with the PSC to implement special rates for data centers, aiming to have these large energy consumers cover the costs of building the necessary energy infrastructure. This proposal comes as Wisconsin anticipates a significant surge in energy demand, potentially doubling by 2030, with We Energies planning to invest $19.3 billion in new electric generation over the next five years. The proposed rates would apply to facilities requiring enough electricity to power hundreds of thousands of homes – a first-of-its-kind rate structure for data center-scale customers in the state.
Tom Content, executive director of the Citizens Utility Board of Wisconsin, warns, “The bottom line is we think there are loopholes in what We Energies has proposed that actually do put customers at risk of paying additional costs with this data center wave.”
We Energies’ Perspective
We Energies officials maintain that the proposal is designed to protect customers from bearing the costs associated with data center development. Brendan Conway, a spokesperson for We Energies, stated, “Making sure our customers aren’t stuck paying data centers’ costs is at the foundation of our customer protection plan. Under our proposal, data centers will pay their own way — covering the power they use and the cost of new generation and distribution built to serve them.”
The plan allows data centers to subscribe to dedicated generation resources, such as solar farms or gas plants, covering all associated costs or contributing 75% of fixed costs while other customers cover the remaining 25% and all fuel costs. We Energies argues the 75-25 split would allow regular customers to benefit from revenue generated by selling electricity on the Midwest energy market.
Potential Risks and Criticisms
However, concerns remain about the viability of this split. Andrew Field, a utility auditor for the PSC, points out that revenues from the energy market are unpredictable and dependent on volatile energy prices. If data centers reduce power consumption, terminate service prematurely, or relocate, customers could be left covering plant and fuel costs without sufficient offsetting revenue.
Organizations like the Citizens Utility Board of Wisconsin and a coalition of clean energy groups are advocating for data centers to assume full responsibility for new resource costs, eliminating the 75-25 split. Abby Novinska-Lois, executive director of Healthy Climate Wisconsin, criticizes We Energies for a lack of transparency, stating that the proposal differs significantly from public statements suggesting no cost to consumers. She emphasizes that a 25% share of infrastructure and 100% of fuel costs represent substantial increases in utility bills for Wisconsinites.
Long-Term Agreements and Infrastructure Lifespan
We Energies proposes 10-year agreements with data centers, with annual renewals thereafter, and penalties for early termination. However, PSC analyst Tyler Meulemans notes that this term may not fully recover the utility’s incurred costs. Environmental groups, including the Sierra Club, argue that the agreement duration is too short compared to the lifespan of the power plants built to serve these facilities, potentially leaving consumers responsible for long-term infrastructure costs.
Cassie Steiner, senior campaign coordinator for Sierra Club Wisconsin, stresses the need for payment agreements that extend throughout the infrastructure’s lifespan to mitigate risks for consumers.
The Future of Energy Rates in Wisconsin
The debate highlights the challenges of balancing economic development with consumer protection in a rapidly evolving energy landscape. The volatility of the tech sector and the potential for shifts in energy demand further complicate the issue. As Tom Content notes, “The tech sector is pretty volatile right now… How do I know that we’re going to be talking about the same thing three years from now?”
The PSC will ultimately decide whether to approve We Energies’ proposal, a decision that will have significant implications for energy rates and the future of energy infrastructure in Wisconsin.
Source: Wisconsin Public Radio
