WisBiz Green Blog
Regulators Move On Data Centers Costs
WisBiz Green Blog
Regulators Move On Data Centers Costs
By Gregg Hoffmann
State utility regulators recently moved in the right direction when they rejected a proposal to have ratepayers share the costs of data center power plants.
Data centers in We Energies’ coverage area will instead be expected to pay the whole cost of new “bespoke” power generation built to serve the data center facilities, the Public Service Commission decided.
This seems like a fair decision that establishes some guardrails for the numerous facilities that have been proposed in Wisconsin.
We should not want to drive data centers out of the state but those who will benefit most from them should pay for the energy costs and use of natural resources.
“Members of the PSC also modified the utility’s proposed contract, known as a tariff, to offset transmission costs from being borne by other ratepayers, It expanded the length of the proposed contract and the scope of customers to which it would apply,” a story in Wispolitics.com read on April 27.
PSC commissioners at a hearing April 24 said having We Energies’ other ratepayers pick up part of the tab for new “capacity-only” generation could create undue harm to existing customers.
“This opened the door to a lot of risk and uncertainty that would impact non-VLC customers,” said Commission Chair Summer Strand, using the abbreviation for the “Very Large Customers” the utility will serve under the tariff.
The decisions drew praise from varied sources involved in the data centers proposals. The Wispolitics.com story reported:
“Microsoft and We Energies praised the ruling. Brendan Conway, media relations director for We Energies’ parent WEC Energy Group, said the ruling ‘underscores the importance of our plan to ensure data centers pay their full share for the power we use in our state’.
“A statement from Microsoft Senior Director of Energy Markets Jeff Riles said the company ‘welcomes’ the Commission’s approval of the tariff.
“Microsoft has always been committed to paying the costs our operations require, and these tariffs give us a clear path to continue investing in the state while living out that commitment to protect other ratepayers,” Riles said.
Environmental and consumer advocacy groups also released statements supporting the PSC’s ruling, according to Wispolitics.
Clean Wisconsin attorney Brett Korte called the decision “an important and positive moment for the regulation of hyperscale data centers,” adding “families in WEPCO’s territory will have lower bills and cleaner air as a result.”
“How this gets implemented in future rate cases remains to be seen, but customers’ interests are in a better place after the PSC supported critical changes to the utility’s proposal that CUB and other groups recommended,” Citizens Utility Board Executive Director Tom Content said in a statement.
States across the country, and the feds, have been struggling with how to regulate and fairly handle rates for data centers. The PSC rulings provide a solid base on those and other issues.
Wisconsin legislators might strengthen things even more by codifying some of the rulings as laws. Local governments, and the citizens who live in those locales, also should be included in decision-making. Local citizens have been rather vocal about data centers and likely played some role in the PSC rulings.
Again, data centers, and those who want to develop them, are not evil bad guys. They likely are working on the future now.
But, data centers should not do what so many of the industries of the past have done – hog energy that adds to costs and harm or deplete natural resources that already are stressed.
PSC regulators moved in the right direction but there still is work to be done.