The order Wisconsin issued in May
The Wisconsin Public Service Commission is the state agency that decides what a utility may charge its customers. In May it ordered the utility We Energies to bill its AI data center customers a minimum transmission charge based on their projected electricity use. Plymouth Review Transmission is the network of high voltage lines and substations that carries electricity to customers. We Energies estimates that transmission related costs make up about 10 percent of a customer’s bill. We Energies sends bills to 1.1 million customers. Vernon Reporter
The charge works as a floor. ATC sets it so that We Energies pays for the full transmission capacity the project asked for, even where the AI data center ends up drawing less than that. WPR The customer pays for the amount of line capacity that was built to serve it, whether or not it ever draws that much power. A campus that runs at half the size its developer forecast still owes on the full forecast. That is the whole point of it.
The state could only reach part of the problem
The Wisconsin commission cannot order the company that builds the lines to bill AI data center developers for the full cost of the equipment put in the ground for them. Only FERC can change the billing rules far enough to keep those costs completely off other customers. Wisconsin Watch FERC is the federal agency that oversees interstate transmission and is asked to approve what utilities charge for it. The transmission utility building the lines here is ATC, and it is FERC rather than the state that approves what ATC collects. What Wisconsin controls is the retail end, meaning the amount We Energies puts on a customer’s bill.
The deal now sitting at FERC
Microsoft’s campus in Mount Pleasant is the subject of a proposed one off billing plan filed with federal regulators. The plan mirrors elements of the state commission’s spring order. ATC expects to spend more than $500 million upgrading that campus’s connection to the grid. Wisconsin Watch In late July the two companies asked FERC to approve a fifteen year arrangement. Urban Milwaukee We Energies would pay ATC for the AI data center’s projected transmission capacity, then charge that same amount to Microsoft. The fifteen years start once ATC completes the infrastructure needed to serve the facility. Microsoft would owe an early termination fee if it walked away before then. Its lawyers have told FERC the fee could force it to pay excessively more than the remaining value of the equipment. We Energies and Wisconsin Public Service, both owned by WEC Energy Group, together hold more than half of ATC. Urban Milwaukee Microsoft says that affiliation is a reason to examine this bargain more closely than an ordinary one.
The package is five contracts, four of them amended versions of earlier commitment agreements for the project and one proposed agreement setting the minimum transmission charge. Microsoft says the two affiliated companies negotiated all of it without its input. Utility Dive Wisconsin only gets to review the package because of who sits on both sides of it. An affiliated deal worth over $359,000 needs commission approval. WPR
Who pays for the lines, before and after the order
A draft report the Wisconsin commission published in June projects that the state’s peak electricity demand will climb 40 percent over the next five years. Peak demand is the most power the system has to supply at any one moment. The growth comes mostly from new AI data centers at Port Washington, Mount Pleasant and Beaver Dam. Vernon Reporter Under the billing structure that ran until May, the line and substation cost behind that growth would have been collected through general electric bills. We Energies AI data center customers paid no minimum transmission charge. Plymouth Review
| Dimension | Before | After |
|---|---|---|
| Who bears cost of transmission built for an AI data center | Spread to customers of all kinds through electric bills | Large AI data center customers owe a minimum transmission charge |
| Basis of the charge | No data-center-specific minimum. Recovery through general transmission rates | The developer’s projected electricity use, the same forecast used to size upgrades |
| Term and exit | No fixed AI data center commitment period | Fifteen years from completion of the infrastructure, with an early termination fee |
| Forum deciding whether costs shift | State rate case at the PSC | PSC order plus FERC review of the filed agreements, now under protest |
| Customer input into the terms | Terms set in general rate proceedings open to parties | Agreements negotiated by affiliated ATC and We Energies without Microsoft’s input |
| Projects covered | No project-specific transmission billing arrangements | Mount Pleasant agreement filed, Port Washington and Beaver Dam agreements not yet filed |
Does the charge keep costs off other bills?
Microsoft told FERC that ATC’s proposed minimum transmission charge agreement lacks a mechanism to prevent Wisconsin Electric Power Co.’s retail customers from paying the costs of those facilities. It says large load customers could end up paying twice. It calls the early termination fee an unjustified windfall. It also says ATC has not shown why it should be allowed to recover project costs while the work is still going on. Utility Dive
The Citizens Utility Board, a group that speaks for ordinary Wisconsin utility customers, told FERC that the charge is figured from ATC’s standard connection rates. It will almost certainly land below what serving these campuses truly costs. Wisconsin Watch Whatever the charge fails to cover still has to be collected from somebody. The group asked FERC to set up one uniform process for dividing transmission costs among all large AI data centers in ATC’s territory, including the projects at Port Washington and Beaver Dam. Microsoft asked FERC to send the whole package into settlement talks run by a judge, or as an alternative to reject the proposal outright.
The Wisconsin Public Service Commission told FERC that these agreements are an improvement compared to past practice but are far from fully responsive to what the federal agency asked for. It said more work is needed to achieve just and reasonable transmission rates. Utility Dive ATC’s answer is that its agreements respond directly to FERC’s concerns about shifting costs onto existing customers, and that those customers are fully protected.
What a developer is signing up for
The fifteen years start when ATC finishes building, not when the contract is signed, so the real commitment covers the construction period and then fifteen years on top of it. The payment floor is tied to the developer’s own load forecast, which is the same number ATC uses to decide how large to build. Asking for extra capacity to grow into now carries a price, because that request becomes a binding minimum the developer pays for fifteen years after the equipment goes live.
The number a developer wants before signing is the size that brings the charge into play at all. ATC applies a minimum transmission charge when the transmission construction cost runs past $100 million, or when the facilities are built to serve more than 100 megawatts of demand. WPR Either test is enough on its own. So a project can be caught by the cost of its connection rather than by its own draw.
Which campuses have no agreement yet?
ATC and We Energies have not asked the Wisconsin commission to approve anything like the Mount Pleasant charge for the Port Washington developers, which are Oracle, OpenAI and Vantage. Plymouth Review On August 6 the commission made ATC file its Port Washington connection application over again, which restarted the 180 day period the agency has to decide that case. One commissioner called the do over the least bad choice available. The application ATC first submitted described more than $1.3 billion of work, including a high voltage line and five new substations across four counties, meant to serve that campus by December 2027.
We Energies says large AI data centers would pay nearly $1.9 billion in 2027 and 2028 toward the infrastructure, equipment and energy needed to serve them. We Energies also says those costs will not be passed along to other customers. WTMJ Milwaukee The same rate request would raise a typical home electric bill by about $13 a month in 2027 and by another $8 to $9 a month in 2028. That request is pending before the Wisconsin commission, its public hearing is scheduled for September 1, and any rates approved would take effect in January 2027.
Tomorrow’s topic
The Florida PSC decision on Duke Energy’s AI data center tariff.