A WE Energies proposal before the Public Service Commission that would create a new class for so-called “Very Large Customers” with a power load of 500 megawatts or more could set a precedent for how data centers are powered and charged.
Scores of individuals took part in public hearings on the proposal last week, according to Wisbusiness.com. Critics contended the proposal offered insufficient protections for the environment and consumers’ energy bills and could allow data centers to game the system.
We Energies’ proposal offers two avenues for data centers to pay for the new transmission and generation capacity needs expected of data centers.
One option would have data centers pay the cost to build, maintain and operate new generation facilities as well as the profit guaranteed to We Energies under the state’s regulated monopoly. Data centers would receive revenue from energy sold on the market for its “bespoke” energy resources as well as renewable energy credits associated with the new generation.
Under the second option, data centers would pay 75% of capital costs for new generation, with other customers picking up the remaining 25% as well as any fuel costs associated with generation. Both data centers and other customers would cover We Energies’ profit margin, though data centers would pay a different, possibly lower, rate to the utility.
The most common issue raised yesterday was the prospect of ratepayers paying higher energy bills, an acute concern with the second option presented in We Energies’ proposal.
Critics also questioned the environmental impact of potentially massive increases in generation needs.
Others questioned whether the new data centers would create the jobs promised by developers like Microsoft and whether the 500-megawatt standard for large customers could let some developments off the hook for paying for new generation costs.
Representatives from area labor unions expecting to build new power plants and transmission lines offered pockets of positive testimony, with James Meyer of IBEW Local 2150 forecasting “thousands of well-paying, union construction jobs” from data center-related development.
We Energies’ proposal is expected to set a significant precedent for how the PSC handles other data center projects. The utilities’ coverage area includes much of southeastern Wisconsin, including a complex of 17 data centers planned by Microsoft in Mount Pleasant.
Legislative efforts to regulate data centers have stalled.
