Residents of communities across Wisconsin have opposed the construction of hyperscale data centers. (Henry Redman | Wisconsin Examiner)
The Wisconsin Department of Natural Resources and a group of environmental organizations announced a settlement agreement Monday that would require stricter environmental impact assessments of future data center developments and initiate a statewide review of how data centers use the state’s resources.
In June, the Sierra Club and Midwest Environmental Advocates sued the DNR in Ozaukee County court, arguing that the agency approved the permits for Vantage’s massive data center currently under construction in Port Washington without conducting a proper environmental impact statement.
“AI data centers are massive, thirsty, energy hogs and have popped up all over Wisconsin,” Elizabeth Ward, director of the Wisconsin chapter of the Sierra Club, said in a statement. “They could completely change our landscape and use unprecedented amounts of water and energy. Wisconsinites and our regulators need to understand the impacts and opportunities to reduce harm before allowing data centers to move forward. Wisconsinites deserve an informed, transparent process for decisions that could shape their communities and environment for decades.
A report this summer by the state Public Service Commission found that the Port Washington data center and data centers being built by Microsoft in Mount Pleasant and Meta in Beaver Dam are set to be responsible for a 40% increase in statewide energy demand over the next six years.
As part of the settlement agreement in the lawsuit, the DNR will conduct full environmental impact statements of individual data center proposals moving forward and complete a statewide strategic analysis of how data centers consume resources.
State law and the DNR’s administrative rules allow the agency to conduct such an analysis when conflicts arise over resource demands for a “complicated or complex issue; an issue that is new to the state; an issue or policy that will likely lead to future department actions that will require an environmental impact statement; issues for which there is a high potential for legislation or new department policy and the planning and development of controversial resource-oriented projects.”
“What started as a lawsuit over the environmental review of one data center has become an opportunity to address the data center issue on a much bigger scale,” MEA attorney Michael Greif said. “Looking at these impacts holistically is important because the impacts of data centers are statewide. State regulators will now have to examine the cumulative impacts of data center development across Wisconsin.”
Wisconsin will become one of a few states assessing the statewide impacts of data centers on their resources. In July, New York Gov. Kathy Hochul signed an executive order that initiated a similar analysis and last December, the Maryland Legislature enacted a law that requires a number of state agencies to study “the likely environmental, energy, and economic impacts of data center development.”
The American Transmission Company (ATC) refiled an application on Monday for a sweeping series of grid upgrades in eastern Wisconsin, restarting the state’s six-month review of a project to plug the new Port Washington data center into the grid.
ATC, the state’s largest transmission utility, initially sought Wisconsin Public Service Commission permission last September, with plans to break ground as early as May 2026. Its initial application outlined a more than $1.3 billion infrastructure package, including a high-voltage transmission line and five new substations across Fond du Lac, Ozaukee, Sheboygan and Washington counties, needed to “reliably serve” the new data center by December 2027.
But the commission sent ATC back to the drawing board last month after the company repeatedly adjusted the project’s design, leaving the public with a hazy picture of the proposal, according to commission staff and ratepayer advocates.
But the utility’s first application underwent multiple redesigns, including the addition of temporary bypass lines to avoid outages during construction. The PSC must review those changes and allow other parties, namely ratepayer advocates and affected landowners, an opportunity to weigh in.
“I don’t recall any other comparable cases in my experience with as many application material document revisions and ongoing design changes throughout the process,” PSC Environmental Affairs Coordinator Adam Ingwell wrote in testimony filed in July. “The sheer volume of documents and revisions, without adequate explanation, likely makes it more challenging than typical for a member of the public to find specific information about the project.”
ATC, by contrast, cast the revisions as “routine.”
“Every application develops during review,” company attorneys wrote last month. “Changes far larger and later than ATC’s have never cast doubt” on whether an application should move forward, they added, citing a Barron County solar farm the PSC approved last March despite an “eleventh-hour” overhaul that included “relocating an entire substation.”
“There is simply no principled basis on which to treat ATC’s lesser and earlier changes more harshly,” the attorneys wrote.
The three-member commission in August unanimously sided with ATC’s critics, directing ATC to submit a new application to give the public a better opportunity to assess the full package.
“This PSC is not opposed or hostile to data centers, construction, generation, (or) transmission,” PSC Chair Summer Strand said, calling the decision “an unfortunate outcome.” Nevertheless, she added, “this application represents a cautionary tale of when unrealistic and unreasonable speed-to-power expectations collide with a deliberative regulatory process.”
How latest application differs
ATC’s new application departs from the previous version in several ways, including removing a segment of transmission line through Trenton in Washington County and Saukville in Ozaukee County.
“The need for this project has not changed, but the application has,” Jared Winters,
ATC executive vice president and chief assets officer, said in a Monday press release.
The PSC will hold a new round of public comment on the project before determining whether it can move forward. That review will begin once the commission determines the new application is “complete.”
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Wisconsin regulators voted Thursday to send the American Transmission Company (ATC) back to the drawing board as the utility attempts to build the grid infrastructure needed to plug in the Port Washington data center.
Public Service Commission (PSC) Chair Summer Strand called the move a “reasonable reset” after ATC repeatedly adjusted the project’s design, which commission staff and ratepayer advocates argued left both regulators and the public with a muddy picture of a grid expansion expected to cost well over $1 billion.
ATC and its partners, however, warned the decision — likely the first of its kind for the century-old commission — could set a dangerous precedent that drives away investment in Wisconsin’s energy sector.
Data center connection at risk
ATC, which owns and operates transmission lines in the eastern half of Wisconsin, is on the hook to connect the soon-to-open Port Washington data center to the electrical grid.
The company approached the PSC last September for permission to break ground on the project as early as this past May. Its initial application outlined a more than $1.3 billion infrastructure package, including a high-voltage transmission line and five new substations spread across Fond du Lac, Ozaukee, Sheboygan and Washington counties, needed to “reliably serve” the new data center by December 2027. After two months of back-and-forth over the “completeness” of ATC’s application, the commission took up the proposal in December 2025.
Meanwhile, the utility has repeatedly adjusted its plans since December, redesigning proposed routes and adding a set of temporary bypass lines needed to avoid outages during construction. The PSC is responsible for reviewing those changes and giving other parties, namely ratepayer advocates and affected landowners, an opportunity to weigh in.
Some commission staff sounded the alarm as the pile of revisions — and questions — grew.
“I don’t recall any other comparable cases in my experience with as many application material document revisions and ongoing design changes throughout the process,” PSC Environmental Affairs Coordinator Adam Ingwell wrote in testimony filed last month. “The sheer volume of documents and revisions, without adequate explanation, likely makes it more challenging than typical for a member of the public to find specific information about the project.”
Those concerns reached Administrative Law Judge Michael Newmark, who criticized ATC for creating an “unreasonable burden” on commission staff and the public by scattering “a plethora of changes, modifications and updates” across six months of filings.
ATC, on the other hand, cast the revisions as “routine.”
“Every application develops during review,” the company’s attorneys wrote on Wednesday. “Changes far larger and later than ATC’s have never cast doubt” on whether an application should move forward, they added, citing a Barron County solar farm the PSC approved last March despite an “eleventh-hour” overhaul that included “relocating an entire substation.”
“There is simply no principled basis on which to treat ATC’s lesser and earlier changes more harshly,” the attorneys wrote.
Ratepayer advocates weigh in
Ratepayer advocates generally avoid wading into fights over transmission line routes and substation siting, which Wisconsin Citizens Utility Board (CUB) Regulatory Affairs Director Corey Singletary described as a “zero-sum proposition” in which a victory for one group of landowners means shifting construction impacts onto another group of landowners.
But CUB raised concerns that ATC’s revisions make it difficult to forecast the project’s cost.
The route changes and new bypasses make the price tag “a moving target,” said CUB Executive Director Tom Content, as does the possibility that ATC still attempts to complete the project by December 2027. “Would they be paying double overtime or triple overtime to build it that quickly?”
The Wisconsin Utility Association itself weighed in on Wednesday to warn the PSC that any additional delays in the project will “lead to increased costs for customers.”
The PSC can’t require ATC to assign project costs to the companies developing the Port Washington data center. Only FERC, the five-person federal regulator that oversees interstate transmission, could overhaul billing rules to fully shield other customers from the costs of new lines and substations needed to serve data centers.
The commission offered an ad hoc solution this spring. The PSC’s May order creating a new billing structure for We Energies’ data center customers requires data center operators to pay a minimum transmission charge based on their projected electricity use. Wisconsin PSC Commissioner Kristi Nieto called the arrangement a “temporary stopgap measure” to protect other customers from the costs of overbuilt infrastructure if data centers use less electricity than anticipated.
ATC and We Energies have since asked the PSC and FERC to approve a minimum transmission charge agreement with Microsoft, the operator of the vast new data center in Mount Pleasant. “This is a customer protection mechanism that follows the ‘cost causer, cost payer’ methodology,” an ATC spokesperson wrote in an email to Wisconsin Watch.
The utilities have not yet asked the commission to approve similar agreements with the companies developing the Port Washington facility: cloud computing giant Oracle, artificial intelligence firm OpenAI and data center developer Vantage.
In testimony filed last month, Singletary urged the commission to enforce “cost containment” measures for ATC’s project, including requiring the utility to cap its annual revenues from the new transmission lines. He also suggested that the commission push ATC to disclose any bids it receives for “work to be performed and equipment to be procured as part of this project,” which he argued would help keep an eye on the company’s efforts to rein in costs.
‘Least-bad option’
All three commissioners aired matching frustrations during a Thursday afternoon hearing on ATC’s infrastructure plans before concurring on what Commissioner Marcus Hawkins called the “least-bad option” — requiring ATC to resubmit its application and restarting the case’s 180-day clock.
“There needs to be flexibility in the process,” said Nieto, “but there also has to be some point at which the changes become significant enough that we need to evaluate whether we are still reviewing the same project that was originally proposed.”
“This PSC is not opposed or hostile to data centers, construction, generation, (or) transmission,” Strand said, calling the decision “an unfortunate outcome.” Nevertheless, she added, “this application represents a cautionary tale of when unrealistic and unreasonable speed-to-power expectations collide with a deliberative regulatory process.”
ATC has not indicated when it will resubmit its application as of Thursday afternoon, nor whether the December 2027 deadline is still within reach. “ATC is disappointed with today’s Commission’s decision and is considering its options,” a company spokesperson wrote after the hearing.
But the company’s final filing before the hearing signaled the possibility of a legal fight. “To date, the Commission has processed the application consistent with the law,” the company’s attorneys wrote. “At this stage,” restarting the process “would be the one action to depart from that.”
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We Energies reassured shareholders on Wednesday that Oracle’s ongoing dispute with state regulators over new credit rating requirements for data center operators poses no threat to the planned hyperscale data center in Port Washington.
WEC Energy Group CEO Scott Lauber, head of We Energies’ parent company, told investors during a quarterly earnings call that the Port Washington facility remains on track to come online as soon as late 2027. In a “worst-case scenario” in which Oracle backs out of the project, “there are a lot of opportunities for that site,” Lauber said, “but at this point, I have no indication that’s the case.”
Wisconsin’s Public Service Commission (PSC) in April approved a rate structure for We Energies’ “very large customers” that requires operators like Oracle to pay for the construction of new power plants needed to meet data center energy needs. But constructing a new plant can cost hundreds of millions of dollars, and any unpaid debts tied to the plants could fall on We Energies’ other customers if a data center operator becomes insolvent.
To shield ratepayers from a potential cost shift, the PSC set a AAA- credit rating threshold for data center operators seeking electric service from We Energies. Companies below the threshold must post steep collateral, either in cash or lines of credit, as a backstop.
That requirement could cost Oracle, the co-developer of the Port Washington data center campus alongside OpenAI and Vantage, over $100 million per year in financial security payments. The company held a BBB credit rating when the PSC approved the credit rating standards, largely because of its aggressive borrowing to finance artificial intelligence ventures and risky business relationship with OpenAI. S&P Global Ratings, one of the “Big Three” credit rating agencies responsible for assessing creditworthiness of government and corporate debt, lowered Oracle’s rating to a BBB- on July 9 — the bottom edge of the agency’s “investment-grade” tier. If the company’s credit rating falls further, Lauber said, “we already have all the collateral we need.”
We Energies asked the PSC to reconsider the rule last month, arguing that the added cost could dissuade other companies from operating in Wisconsin. “If the Commission does not reopen its decision on this issue, the implications for Wisconsin would be significant and limit the ability of numerous investment-grade companies to invest in Wisconsin,” the utility’s attorneys wrote in their request. The PSC declined We Energies’ request earlier this month.
Lauber sounded more optimistic about the credit rating requirements on Wednesday. “I don’t think the collateral will be an issue long term,” he said, noting that ratings agencies reacted positively to the credit rating threshold.
We Energies is currently in talks with at least two other data center operators interested in setting up Wisconsin operations, albeit at far smaller scales than Oracle or Microsoft, which operates a new data center campus in Mount Pleasant. Lauber told shareholders that the credit rating requirements pose no obstacle to those prospective customers.
Oracle, however, sued the PSC in Ozaukee County Circuit Court last month, asking a judge to “set aside, reverse and remand” the credit rating requirements. The tech giant argues the commission acted outside of its authority in approving the rule and that the AAA- bar isn’t “needed to prevent harm” to We Energies’ other customers.
We Energies is an interested party in that lawsuit, but it did not join Oracle as a plaintiff.
Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.
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