Blab Business
Xcel Energy Seeks to Shift Data-Center Costs to Developers in Wisconsin
Xcel Energy’s latest rate proposal could make data centers shoulder the cost of Wisconsin’s power grid expansion.
On Monday, Xcel filed with the Wisconsin Public Service Commission (PSC) a proposal that would require large electric customers—especially data centers—to cover all expenses tied to new transmission lines or power plants they need to meet demand.
The proposal would bind any new customer adding 100 megawatts (MW) or more of load to 15‑year terms and minimum monthly payments, regardless of actual usage. The rates are not linked to a particular customer or project, but Xcel’s regional vice president of regulatory policy, Tyrel Zich, says the utility has 2.9 gigawatts (GW) of pending requests from big customers in Wisconsin.
Xcel’s president for Wisconsin and Michigan, Karl Hoesly, emphasized that the plan is designed to shield existing ratepayers. "We recognize the growing energy needs of large customers, including data centers, and the important role they play in driving economic growth and innovation in Wisconsin. At the same time, it’s critical that growth is managed in a way that does not raise the rates of customers and supports the communities we serve," he said.
The proposal also adds financial safeguards. Developers lacking strong credit would have to post letters of credit or cash in the hundreds of millions. Creditworthy customers or parent companies could assume responsibility if a subsidiary defaults, and exit fees would apply if a developer leaves the system early.
The PSC has already tightened rates for other utilities tied to data‑center projects. Last month it mandated Alliant Energy to shoulder costs if its subsidiary Degas, LLC could not pay for a $1 billion data‑center campus in Beaver Dam. Earlier in April, the PSC altered financial support requirements for We Energies, a change that both developers and the utility have asked regulators to revisit.
The proposal will undergo scrutiny from several groups. Tom Content, executive director of the Citizens Utility Board, said the group would examine the plan to protect customers. "The PSC has set a pretty firm stance … with the message to the utilities and to tech companies that the customers of the utilities who aren’t data centers should not be paying a dime or a nickel or a cent for data centers," Content said. Cassie Steiner of the Sierra Club Wisconsin chapter also plans to review the proposal, citing the need for "appropriate guardrails" for customers, communities and the climate. Meanwhile, Robb Kahl, executive director of the Madison‑based Construction Business Group, welcomed the proposal, arguing that large projects can bring jobs, economic activity and a stronger tax base when done right.
Xcel maintains that details of individual customer requests are confidential. Zich said the utility does not disclose information about developers or project locations until a customer chooses to release it publicly. The company applies the same nondisclosure policy to all customers, whether residential or commercial.
Xcel hopes the PSC will approve the proposal by February next year. If accepted as filed, the rates would ensure that new large electric customers—including data centers—pay the full cost of the infrastructure they require, without raising rates for other customers. The decision will set a precedent for how utilities in the state handle the rapid expansion of data‑center demand, a sector that consumes an increasing share of the grid’s capacity.
The proposal comes amid growing scrutiny of data‑center development in Wisconsin. Last year the mayor of Menomonie halted a $1.6 billion data‑center proposal by Balloonist, LLC, and the city council later passed an ordinance restricting such development.
As the state’s largest regulated utility, Xcel’s proposal reflects a broader trend of utilities seeking to balance the need for new infrastructure with the protection of existing ratepayers. The outcome of the PSC review will be closely watched by developers, ratepayers, and regulators across Wisconsin.
On Monday, Xcel filed with the Wisconsin Public Service Commission (PSC) a proposal that would require large electric customers—especially data centers—to cover all expenses tied to new transmission lines or power plants they need to meet demand.
The proposal would bind any new customer adding 100 megawatts (MW) or more of load to 15‑year terms and minimum monthly payments, regardless of actual usage. The rates are not linked to a particular customer or project, but Xcel’s regional vice president of regulatory policy, Tyrel Zich, says the utility has 2.9 gigawatts (GW) of pending requests from big customers in Wisconsin.
Xcel’s president for Wisconsin and Michigan, Karl Hoesly, emphasized that the plan is designed to shield existing ratepayers. "We recognize the growing energy needs of large customers, including data centers, and the important role they play in driving economic growth and innovation in Wisconsin. At the same time, it’s critical that growth is managed in a way that does not raise the rates of customers and supports the communities we serve," he said.
The proposal also adds financial safeguards. Developers lacking strong credit would have to post letters of credit or cash in the hundreds of millions. Creditworthy customers or parent companies could assume responsibility if a subsidiary defaults, and exit fees would apply if a developer leaves the system early.
The PSC has already tightened rates for other utilities tied to data‑center projects. Last month it mandated Alliant Energy to shoulder costs if its subsidiary Degas, LLC could not pay for a $1 billion data‑center campus in Beaver Dam. Earlier in April, the PSC altered financial support requirements for We Energies, a change that both developers and the utility have asked regulators to revisit.
The proposal will undergo scrutiny from several groups. Tom Content, executive director of the Citizens Utility Board, said the group would examine the plan to protect customers. "The PSC has set a pretty firm stance … with the message to the utilities and to tech companies that the customers of the utilities who aren’t data centers should not be paying a dime or a nickel or a cent for data centers," Content said. Cassie Steiner of the Sierra Club Wisconsin chapter also plans to review the proposal, citing the need for "appropriate guardrails" for customers, communities and the climate. Meanwhile, Robb Kahl, executive director of the Madison‑based Construction Business Group, welcomed the proposal, arguing that large projects can bring jobs, economic activity and a stronger tax base when done right.
Xcel maintains that details of individual customer requests are confidential. Zich said the utility does not disclose information about developers or project locations until a customer chooses to release it publicly. The company applies the same nondisclosure policy to all customers, whether residential or commercial.
Xcel hopes the PSC will approve the proposal by February next year. If accepted as filed, the rates would ensure that new large electric customers—including data centers—pay the full cost of the infrastructure they require, without raising rates for other customers. The decision will set a precedent for how utilities in the state handle the rapid expansion of data‑center demand, a sector that consumes an increasing share of the grid’s capacity.
The proposal comes amid growing scrutiny of data‑center development in Wisconsin. Last year the mayor of Menomonie halted a $1.6 billion data‑center proposal by Balloonist, LLC, and the city council later passed an ordinance restricting such development.
As the state’s largest regulated utility, Xcel’s proposal reflects a broader trend of utilities seeking to balance the need for new infrastructure with the protection of existing ratepayers. The outcome of the PSC review will be closely watched by developers, ratepayers, and regulators across Wisconsin.
