Here & Now

Tom Content on Data Center Energy Use and Utility Ratepayers

Frederica Freyberg:
A recent state projection shows Wisconsin will lose more than $2 billion in sales tax revenue because of an exemption written into the ’23-’25 state budget for data centers, a break designed to promote economic development. Three years later, the state is swimming in new data centers with consumer concerns about water and energy usage. But in a win for consumers, the Wisconsin Public Service Commission just ruled that existing electricity customers should not pay a single cent to subsidize the service of data centers. The ruling is also a major win for the Citizens Utility Board, which fought on behalf of customers. Executive director of CUB Tom Content joins us now with more. And thanks very much for being here.

Tom Content:
Oh, great to be with you.

Frederica Freyberg:
So you’ve said that this case was the most significant one that CUB has ever been involved in. So when the PSC ruled, what was your reaction?

Tom Content:
I was, I was frankly surprised. I, I’ve had a good feeling that we were going to get some of what we asked for in terms of significant changes to what the proposal was. But we got the vast majority of our changes or changes that addressed our concerns. They really — the commissioner really sent a message, even though they can’t control every cent, they sent a message that every dollar needs to be accounted for and every –as they, as one of the commissioners put it, every cent should be paid for by the tech companies.

Frederica Freyberg:
So how does the proliferation of data centers in Wisconsin engage consumers in a way that other rate cases may not have?

Tom Content:
It’s, I think, it’s a combination of fear of concerns about rising energy costs, because we’ve already come into this period with rising energy costs that have risen at rates higher than inflation, paired with the local community reaction and basically the Wisconsin reaction, as noted in the Marquette polls to data centers. And, you know, the Marquette poll that just came out showed a lot more clarity about where Wisconsinites stand about data centers than it showed about who’s running for governor. And they — by a 2 to 1 margin, people said that the cost of data centers outweigh the benefits. And I think layered into that is fear of AI and what it’s — what the impacts of AI are on the economy and society down the road. I think that plays into it too.

Frederica Freyberg:
Because I understand that thousands of people kind of came to CUB and said, yes, we want the PSC to rule in this way.

Tom Content:
Thousands of people went to the PSC hearings or PSC hearings or submitted comments online. And so those could have been people in Milwaukee, people around the state, We Energies customers and others. I mean, frankly, the tech companies and the utility were saying the right things all along that they were going to meet their demand or that they were going to play their own way. But for us, the devil was always in the details, and we found some loopholes and just areas of concern where we thought the risks that customers were still going to be on the hook were too high with what the proposal was.

Frederica Freyberg:
So does the ruling mean that power company customers will not be on the hook at all for the giant energy needs of these data centers?

Tom Content:
They went as far as they could. They ran into a couple areas where they couldn’t go as far as they wanted, because certain things were out of the state’s control. And what I mean by that is if — people may have seen that at the White House; the tech companies were at the White House pledging to pay their own way and signed a ratepayer protection pledge. Now, that was more of a, you know, an optics document, a rhetoric document and it was non-binding, but it actually committed the tech companies to pay their way for all the network upgrades, which to us sounds like the power lines, right? The big power lines. And the fact is, our power line company, American Transmission Company that is building $2 billion of infrastructure to feed these data centers, is actually regulated out in Washington, D.C. so the state Public Service Commission couldn’t change that. And so as a result, the commissioner sent a message that they could only go so far, but they called on ATC and the We Energies parent company to make changes that would protect customers from, frankly, billions of extra costs tied to these projects.

Frederica Freyberg:
What else stood out for you from the PSC on this case?

Tom Content:
I think what stood out is that the fact that the data centers will be on the hook for 100% of the new power plants. There was one scenario where other customers, small businesses, homeowners, renters would be on and other businesses would be on the hook for up to 25% of the cost of new power plants. And that’s not a small number. We Energies has already gotten approval for over almost 2 billion in projects and has another 6 billion in the queue. So a quarter of that — a quarter of that would have been a couple billion dollars on the hook that customers would have been responsible for so that was a big — the biggest change and one that we really appreciated.

Frederica Freyberg:
All right. Well, we appreciate you joining us today on this. Tom Content, thanks so much.

Tom Content:
Thank you.