Milwaukee Common Council opposes We Energies’ data center rate plan

The Milwaukee Common Council has called on state utility regulators to reject We Energies’ data center rate proposal in its current form.

The council unanimously adopted a resolution March 3 opposing We Energies’ proposal to create a separate energy rate for large-scale data centers, saying the plan does not go far enough to protect ratepayers.

At the same time, a group of council members led by District 14 Ald. Marina Dimitrijevic is drafting a six-month moratorium on data center development in the city of Milwaukee.

We Energies’ plan “is not a good deal for Milwaukeeans,” Dimitrijevic said during a Common Council meeting March 3.

We Energies’ proposal would create a separate energy rate for “very large” customers with an expected load of 500 megawatts or more. These very large customers, which include data center developers like Microsoft and Vantage, would pay for the massive amount of new infrastructure being built to serve them.

In October, We Energies filed plans to build more than $5 billion in new solar projects and natural gas plants to meet electricity demand brought by hyperscale data centers.

The utility says its rate plan protects customers from bearing costs associated with these projects, and hold data center companies responsible for costs through the life of the new assets.

“Our proposal is fair, transparent, and establishes strong safeguards — including binding agreements so data centers owners, not other customers, pay for the infrastructure they require,” We Energies spokesperson Brendan Conway said in a statement. “That means Wisconsin families are not subsidizing these projects.”

The resolution, introduced by Dimitrijevic, calls for stronger ratepayer protections, including binding service agreements that last the life of new infrastructure and include termination charges. It also wants the “very large” customer threshold lowered from 500 megawatts to prevent avoidance by data center companies.

In filings submitted to the Public Service Commission, We Energies said it would be willing to lower the threshold to 250 megawatts.

The resolution took particular issue with We Energies’ proposed cost split for the new natural gas plants. Under the current proposal, data center companies would pay for 75% of operating and maintenance, and other ratepayers would cover the remaining 25% as well as annual fuel costs.

We Energies says the plants will serve all customers as demand for energy is projected to rise across rate classes.

“If data centers never existed, we would’ve had to have built other plants, other power generation to meet our customers’ increasing need,” Conway previously told the Journal Sentinel.

The resolution said data center companies should pay “100% of all incremental and fixed costs required to serve them, including generation capacity, operations and maintenance, and fuel costs attributable to serving the data center load.”

Council members’ concerns echo those brought by environmental and consumer advocacy groups during a public hearing Feb. 10. The Public Service Commission will rule on the proposal by May 1.

This is not the first time the City of Milwaukee has weighed in on We Energies cases brought before the Public Service Commission. It’s intervened in opposition to previous energy rate hikes proposed by the utility, arguing they disproportionately burden thousands of low-income Milwaukee households.

In December, Dimitrijevic proposed a six-month moratorium on data center development in the city. The pause will give council members time to establish a regulatory framework for large-scale data center proposals, she told the Journal Sentinel.

“Sometimes the economy moves so quickly that we haven’t been able to catch up in licensing,” Dimitrijevic said. “We have to set up a careful way to regulate it and have public input.”

A group of aldermen want to require data center developers apply for a special use permit through the Milwaukee Zoning Appeals Board, a process they say creates more transparency. Should this pass, large data center proposals would be subject to public hearings, and the Zoning Appeals Board can reject a plan based on public health concerns.

The moratorium will receive a public hearing in the next few weeks.

This article was updated to include new information.

Francesca Pica can be reached at fpica@usatodayco.com.