We Energies is seeking approval from the Public Service Commission of Wisconsin for new electricity rates to be paid by
Microsoft and other data centers in southeastern Wisconsin.
The proposal includes a new “Very Large Customer Tariff” and a new “Bespoke Resources Tariff.” The former addresses payment for the customer’s electricity needs while the latter commits the customer to paying for generation facilities needed to meet the increased demand.
The two tariffs are intended to “work hand-in-hand” as a customer will be required to subscribe to a “bespoke resource” in order to receive service under the VLC tariff, according to documents submitted to the PSC.
We Energies says the objective of the proposed tariffs is to provide data center operators speed to market, reliability and lower costs while also protecting existing customers with protection.
The utility says it negotiated with multiple customers who would be eligible for the tariffs to meet those objectives. Those customers agreed to support the final form of the tariffs prior to We Energies submitting its application to the PSC.
In a statement provided to BizTimes, the company said the proposal "would benefit all customers, while helping to make Wisconsin a hotbed for data center investment and encourage economic development in the state."
"Under this 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," the statement says.
"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 addition of data centers in southeastern Wisconsin, including Microsoft in Mount Pleasant and the proposed Cloverleaf project in Port Washington, represents a dramatic increase in electricity demand in the region. Some advocates have raised concerns that investments needed to meet the increased demand would be paid for by all customers, not just Microsoft and other data operators.
For its part, Microsoft has repeatedly expressed its willingness to pay its share for the facilities needed to serve its data center.
“Microsoft is committed to being a responsible neighbor in Wisconsin," Bobby Hollis, vice president of energy at Microsoft, said in a statement. "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.”
However, until the new tariffs were proposed, it was unclear exactly how that goal would be achieved.
Eligibility for We Energies data center rates
To be eligible for the VLC, a customer needs to be otherwise eligible for the rates paid by large customers, provide We Energies with a forecast of projected demand, take service at a minimum level and have an aggregate load forecast of at least 500 megawatts of new electric load.
VLC customers have to enter into an initial 10-year service agreement with automatic one-year renewals unless the customer provides notice a year in advance.
The tariff has nine billing elements, starting with a $213,118 fixed charge per month and a $305 per megawatt of maximum customer demand variable cost.
“This monthly administrative charge covers the full personnel and overhead costs dedicated to serving any new VLC. These costs are in 2025 dollars and will escalate annually in January based on the Consumer Price Index for the preceding calendar year,” the application to the PSC says.
The VLC tariff also includes charges to pass along for transmission, distribution and costs from the Midcontinent Independent System Operator or MISO, the energy grid operator covering Wisconsin.
Generating electricity for data centers
In addition to the VLC tariff, data center customers will be required to subscribe to at least one bespoke resource. The tariff would have the data center operator pay different costs based on whether the company subscribed to the full benefits of the resource or capacity only. In the former case, the data center would pay the full revenue requirement for the associated generation facility while in the latter the data center would pay 75% of costs.
To meet the need from data centers to move quickly, We Energies says it has adjusted how it plans new generation projects.
The company “has developed an accelerated generation planning “approach under which the company secures long lead time equipment, subject to recovery from the eligible customer if a project does not move forward, to lock in pricing, shorten construction timelines, and ensure reliable electric supply to the eligible customers.”
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