Data Center Demand and the Looming Power Bill Risk for Wisconsin Residents
Wisconsin is bracing for a potential surge in electricity costs as data centers – the energy-hungry engines of the digital age – rapidly expand across the state. While promising economic benefits, the influx of these facilities is raising concerns that residential and industrial customers could shoulder a disproportionate share of the burden for upgrading the state’s energy infrastructure. The debate centers on a proposal by We Energies, and the stakes are high for the future of energy affordability in Wisconsin.
The Scale of the Challenge: A Doubling of Demand
We Energies estimates that serving new data centers in Mount Pleasant and Port Washington could double its energy demand by 2030. To meet this anticipated growth, the utility plans to invest a staggering $19.3 billion in new electric generation over the next five years. This massive undertaking necessitates a critical question: who will pay for it? We Energies’ proposal attempts to address this by creating special rates for data centers, requiring them to cover the costs of the infrastructure built to support their operations. However, critics argue that loopholes within the plan could ultimately shift costs onto everyday Wisconsinites.
The 75-25 Split: A Point of Contention
At the heart of the controversy lies a proposed 75-25 cost-sharing arrangement for certain new power generation resources, primarily natural gas plants. Under this model, data centers would cover 75% of the fixed costs of a plant, while existing utility customers would foot the remaining 25%, plus all fuel costs. We Energies contends this split allows regular customers to benefit from revenue generated by selling excess electricity on the regional energy market. However, as Andrew Field, a utility auditor for the Public Service Commission of Wisconsin (PSC), points out, revenue from these markets is far from guaranteed and is subject to the volatility of energy prices.
“If data centers use less power than expected, terminate service early, or even leave the state, customers could still be on the hook for plant and fuel costs without sufficient revenue to offset them,” Field testified. This risk is particularly concerning given the rapidly evolving tech landscape and the potential for shifts in demand driven by advancements in artificial intelligence and other emerging technologies.
Beyond Costs: The Fossil Fuel Reliance
The debate extends beyond financial implications to environmental concerns. Environmental groups, including the Sierra Club of Wisconsin, argue that We Energies’ plan relies too heavily on fossil fuel infrastructure – specifically, new natural gas plants – to meet the growing demand from data centers. This reliance contradicts broader efforts to transition to cleaner energy sources and reduce carbon emissions. Cassie Steiner, senior campaign coordinator for Sierra Club Wisconsin, emphasizes that the proposed 10-year agreement term is insufficient, falling short of the lifespan of the power plants themselves. “This payment agreement needs to be in place through the life of the infrastructure,” Steiner stated, “Otherwise, we’re all at risk for paying for these things, especially if data centers pull out or back out of plans.”
The AI Factor: A Volatile Future
The rapid rise of artificial intelligence is a key driver of data center growth, but it also introduces a significant element of uncertainty. As Tom Content, executive director of the Citizens Utility Board of Wisconsin, notes, the tech sector is notoriously volatile. “The big story is AI and data centers, but we weren’t even talking about that three years ago, and now it’s all we’re talking about,” Content said. “How do I know that we’re going to be talking about the same thing three years from now?” This unpredictability raises questions about the long-term viability of basing substantial infrastructure investments on the projected demand from data centers.
Safeguarding Consumers: What’s Next?
The Citizens Utility Board of Wisconsin and a coalition of clean energy groups are advocating for data centers to bear the full cost of new resources, eliminating the 75-25 split altogether. They argue that this is the only way to truly protect ratepayers from potential financial burdens. The PSC is currently reviewing We Energies’ proposal and is expected to issue a decision in the coming months. The outcome will have far-reaching consequences for Wisconsin’s energy future and the affordability of electricity for its residents.
The situation in Wisconsin serves as a microcosm of a broader national trend. As data centers proliferate to support the ever-increasing demands of the digital economy, states across the country will grapple with similar challenges – balancing economic development with the need to protect consumers and ensure a sustainable energy future. The key will be finding innovative solutions that incentivize responsible growth and prevent ratepayers from being left to foot the bill for the digital revolution.
Learn more about data center energy consumption from the U.S. Department of Energy.
What are your predictions for the future of data center energy regulation? Share your thoughts in the comments below!
