We Energies has asked Wisconsin regulators to revisit recent rulings on electrical rates for data center customers, arguing that new credit rating requirements create an undue burden for operators. The Wisconsin Public Service Commission (PSC) approved We Energies’ ‘very large customer’ rate structure in April, requiring the utility to bill data center customers for new energy generation infrastructure and demanding financial guarantees from developers with credit ratings below A-.
Impact on Local Businesses
This requirement poses a problem for Oracle, which is partnering with OpenAI and Vantage to develop a data center campus in Port Washington. Oracle holds a BBB credit rating, which is considered investment-grade but below the A- bar set by the PSC. Under the current rate structure, Oracle would need to provide cash deposits or letters of credit exceeding $100 million per year to receive We Energies service.
We Energies argued that the risks of Oracle or other tech giants defaulting on obligations are extremely low, citing the value of Oracle’s assets and the potential for generators built to serve data centers to still provide electricity to other customers in the event of bankruptcy. The utility proposed a stepped approach to security requirements that eases the burden on companies with ‘investment-grade’ credit ratings, including BBB ratings.
Regulatory Response
Ratepayer advocates backed credit limits for data center developers during the PSC’s deliberations on the case, citing the example of Enron, which held a BBB credit rating before its bankruptcy in 2001. The Union of Concerned Scientists energy analyst Maria Chavez pointed out that We Energies’ arrangements with new hyperscale data center customers differ from other service agreements, requiring new, dedicated energy sources and posing a greater risk to ratepayers.
We Energies and Oracle urged the commission to ‘move quickly’ on the issue to ‘provide certainty for generational investments that are currently moving forward in this state.’ The outcome of this decision will have significant implications for Wisconsin’s ability to attract investment-grade companies and support local economic development.
Original reporting: Wisconsin Watch — read the source article.
