Data centers and local communities would be barred from working in secret under legislation that received a public hearing before a state Senate committee Tuesday.

The Senate Committee on Utilities, Technology and Tourism also heard testimony on a pair of competing bills, both pitched as ensuring that data centers pay their own way for the electric power they use and controlling how they use water resources.

SB 969 would impose a blanket ban on non-disclosure agreements between data center companies and the municipalities where they’re planning projects.

“Unfortunately, we have witnessed a troubling pattern in Wisconsin and throughout our country — community leaders are signing secrecy deals with big tech companies and their agents to conceal material facts about the development of billion-dollar data centers from the public,” said Sen. Andre Jacque (R-New Franken), the bill’s author, in his testimony on the measure. “These same entities seek to hide vital information about the scope and impacts of their intended developments from the local officials charged with guarding their citizens’ welfare, undermining sound decision-making and eroding confidence in the process.”

The secrecy surrounding a data center project in Menomonie prompted local opposition that led the community’s city council to pass an ordinance in January stopping a developer from advancing the $1.6 billion project.

“This bill is really about trust,” said state Rep. Clint Moses (R-Menomonie), the author of the bill’s Assembly companion. “It makes sure those conversations happen in the open and not behind closed doors.”

A data center industry lobbyist opposed the measure, asserting that a ban on non-disclosure agreements, or NDAs, could stall Wisconsin’s emergence as a prime data center location.  

Brad Tietz, the state policy director for the Data Center Coalition, said the industry group has been working with its member businesses “on model frameworks that ensure early and proactive community engagement and transparency while safeguarding sensitive proprietary and security information.”

Non-disclosure agreements are especially important in the early stages of data center site selection, “where a company may be considering multiple sites and has not yet made a final decision,” Tietz told lawmakers. “But to simply put a blanket opposition on NDAs would put Wisconsin at a competitive disadvantage right when it is primed to do exceptionally well in this industry.”

Data center utility costs

The bulk of Tuesday’s hearing focused on two other pieces of legislation, one authored by Democrats and the other by Republicans. Both measures were written with the intent of ensuring that power-hungry data center developments don’t pass off their electricity costs to the rest of the public.

SB 729 is authored by Sen. Jodi Habush Sinykin (D-Whitefish Bay) and state Rep. Angela Stroud (D-Ashland). The Assembly companion is AB 722.

“Wisconsin must establish a comprehensive and responsible regulatory framework that protects Wisconsin taxpayers, workers, and our natural resources now and into the future,” Habush Sinykin told the committee. “Yet here’s the rub. Currently, Wisconsin has no statewide regulatory standards governing hyperscale data centers. None.”

Habush Sinykin said that the bill was written in consultation with the state Public Service Commission. It would put data centers in a new class of electric power users, “very large customers,” and require utilities serving those users to file a rate case for that class every two years.

“I believe that we all have a shared goal of ensuring that the public does not pay for the energy expenses of data centers,” Stroud told the committee. “According to the Public Service Commission, establishing a very large customer class tariff is the most effective tool currently available to ensure that energy-related costs are borne by data centers rather than shifted on to the general public.”

Utilities would also be required to report quarterly their data center users’ energy consumption and sources and make that information public.

Because data centers are also heavy uses of water, the bill requires water utilities to notify the PSC of individual customers that use 25% of the utility’s water volume.

The Habush Sinykin/Stroud bill includes provisions to encourage renewable energy use and the use of union labor. In order to qualify for a sales and use tax exemption from the Wisconsin Economic Development Corp., the data center must derive at least 70% of its energy from renewables and pay the construction workers the prevailing wage in the region if they aren’t covered by a union contract.

The committee chair, Sen. Julian Bradley (R-New Berlin), questioned those provisions.

“This bill appears to me as though it’s going to say, ‘Well, you can come here. We understand you bring a massive economic impact, but actually we want more,’” Bradley said. “It’s going to drive them away from the state of Wisconsin and then we’re going to lose out.”

But Stroud said data center developers have been enthusiastic about adopting clean energy.

“We are extending tax credits to the richest companies in the world. It is not a small thing to do that,” Stroud said. “We should be getting a huge benefit. And it would change the conversation, I think, in a lot of these communities if they had access to significant benefits.”

Republicans go in a different direction

The alternative bill — AB 840/SB 843, authored by Rep. Shannon Zimmerman (R-River Falls) and Sen. Romain Quinn (R-Birchwood) — mostly takes different approaches on all of the issues involved. The Assembly version passed that house in January on a mostly party-line vote of 53-44, with two Democrats voting in favor of the legislation and one Republican voting against it.

The bill directs the PSC, in writing its rate-making orders, to ensure that the utility costs of large data centers aren’t passed off to any other customer, but doesn’t offer specific directions on how to do that. It includes language stating that developers must hire Wisconsin workers to the extent possible.

The legislation also would require that any renewable energy facility that primarily serves the load of a large data center be located on the data center property.

“This will improve reliability by reducing dependence on a distant power grid and safeguards our communities from being burdened with large energy projects that exist solely to serve data center facilities elsewhere,” Quinn said.

The bill also requires the water used at a center to be recycled, and includes requirements that data center developers post a bond that can be used to reclaim the property if the project is abandoned before it’s completed.

Earlier, Stroud said the GOP bill’s requirement restricting renewable energy to on-site at data centers would be “a non-starter for many of the companies seeking to locate in our state.”

In his testimony, however, Quinn defended the provision as a safeguard against saddling other customers with the data centers’ energy costs. “I believe we should make it more attractive for data centers to build their own power supply,” he said.

Sen. Melissa Ratcliff (D-Cottage Gove) asked Quinn why he and Zimmerman didn’t work with Sinykin and Stroud on a common piece of legislation. Quinn replied that the provisions the Democrats prioritized wouldn’t pass in the current Legislature, including the prevailing wage provision and the renewable energy provisions.

During her portion of the hearing, Habush Sinykin said the provision for recycling water in the Republican bill was of interest to her. She also emphasized that lawmakers should work together across the aisle on legislation to address the broader concerns about data centers.

“The Senate is here through March, and the Assembly can be called back as well,” Habush Sinykin said. “I believe it makes sense and the conditions warrant a call for a special session or an extraordinary session, because people in Wisconsin do not want to wait another year or more to have regulation filling this vacuum.”

Tom Content, executive director of the Citizens Utility Board, testified that affordability was a top concern for Wisconsin ratepayers.

“Electricity costs are surging at a pace higher than inflation over the past four years,” Content told the committee. “Wisconsin has the second highest electricity rates in the Midwest.”

His organization “recognizes the intent of the authors on both sides to shield customers from higher costs,” Content said. “Our hope and expectation, given that affordability is job one right now, is that lawmakers will work together in the remaining days of the session and across the aisle to take the most workable provisions of both and find common ground on a plan that the governor will sign into law.”

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At a public hearing held by the Wisconsin Public Service Commission Tuesday, dozens of Wisconsin residents decried the effects massive data centers could have on the state’s electricity rates and ability to adopt renewable energy sources. 

The three-member PSC is considering a proposal from the Wisconsin Electric Power Company to establish a tariff system for providing electricity to massive data centers. Under the proposal, “very large” customers that would be subject to the tariff would have a combined energy load of 500 megawatts — the equivalent of powering about 400,000 homes. 

The first phase of Microsoft’s $13.3 billion data center project in Mount Pleasant is projected to require 450 megawatts. 

Critics of the proposal say that under this system, regular consumers will still be on the hook for 25% of the infrastructure costs associated with increasing the state’s energy load. 

Over the past year, the growth of data center development in Wisconsin has spurred an increasingly tense debate. Local governments have been tempted to allow their construction as a source of property tax revenue while local residents raise concerns over energy and water use, the conversion of historical farmland, the ethics of artificial intelligence and long-term environmental impacts.

The massive energy needs of data centers have become the central issue in the debate, with people in Wisconsin and around the country questioning how to manage the demands of giant corporations seeking to use orders of magnitude more energy than is currently being produced.

“I speak to you not only as a We Energies customer, a member of the Wisconsin State Senate, but on behalf of people across Wisconsin who have communicated to me their worry and fear about the development of hyperscale data centers,” Sen. Chris Larson (D-Milwaukee) said at the hearing. “This worry and fear transcends political divides and income brackets, residents and small businesses alike fear that these data centers will fundamentally alter and potentially destroy our Wisconsin way of life, and with good reason; the scale of the proposed development is unprecedented.” 

Larson added that often “this debate is framed as a false choice that our state must prioritize economic growth or meet our clean energy and climate goals. This is simply not true. In reality, Wisconsin can and must be a leader in pursuing both advancing economic development while accelerating a just transition to affordable, reliable, clean energy in a way that does not harm residents, health, economic security or the environment.”

The vast majority of those testifying during the more than three-hour hearing Tuesday afternoon were opposed to the structure of the proposed system — largely due to the 500 megawatt threshold proposed by the utility company. 

Several people said they were concerned that the threshold being set at this level would encourage the growth of still large data centers that use less than 500 megawatts of energy — and the costs of those centers’ electricity use will be passed on to regular consumers. 

“I submit that 500 megawatts is at least an order of magnitude too high,” Pleasant Prairie resident Charles Hasenohrl said. “The threshold should be lower than 50 megawatts, where at that point, companies are required to cover all costs, which again include generation, transmission and distribution.” 

Opponents also said they were concerned that data centers increasing the energy demand in Wisconsin will encourage the PSC and the state’s utility companies to construct new natural gas power plants, instead of encouraging the growth of renewable energy sources such as solar and wind.

“Renewable energy is the cheapest way to generate electricity, and it’s only getting cheaper,” Dr. Jonathan Patz, a professor of health and the environment at UW-Madison, said. 

Patz added that burning fossil fuels to provide energy for currently proposed data centers in southeastern Wisconsin will increase air pollution not only in the immediate region but spread to Chicago and western Michigan. 

“Because the right choice happens to be both the safest and the most affordable. That’s solar and wind power,” Patz said. “Let’s stop killing people unnecessarily with pollution from burning fossil fuels, especially knowing the multi-decadal life span of a power plant. The rest of the world is turning to renewable energy. Why should the PSC prevent us from transitioning to clean energy and improving our health at the same time?”

The handful of people who testified in favor of the proposal were union representatives. Several of the state’s unions have been vocal in supporting the construction of data centers, arguing that their members will benefit from the jobs created while the centers are being built. The union representatives said that the state should work to protect costs from being passed on to ratepayers, but that the state shouldn’t discourage data centers from coming to Wisconsin. 

“These projects require significant amounts of power, far beyond what’s available today to be operational and successfully run,” Jim Meyer, business manager for IBEW Local 2150, said. “Faced with this problem, the traditional method of having a utility company add power generation capacity through building more power plants, then spreading those costs over its customer base, would simply be unfair to its everyday customer, like my membership, who live and work in the areas and are also customers themselves. The VLC tariff will put the tab for those plants exactly where it belongs, with those very large customers who need that new electric load.”

PSC Administrative Judge Michael Newmark said that the job of the commission isn’t to decide if the state should go all in on encouraging data center construction but only the “reasonableness of the rates, terms, and conditions of electric service” in the We Energies proposal. Several people testifying expressed frustration that often the commission holds public hearings only to ultimately vote against the majority sentiment of the public and side with corporate utility interests. 

“I am wondering whether this is an exercise in futility,” Milwaukee resident Ted Kraig said. “Technologically, it makes no sense to be building up old fossil fuel infrastructure, and still, the Public Service Commission just goes and basically rubber stamps it. My concern is that we can have 1,000 people testifying with the best evidence and arguments imaginable, but the Public Service Commission sitting there with little check boxes … We Energies gets whatever it wants.” 

The Public Service Commission is expected to make its decision on the tariff by May 1.

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Correction: An earlier version of this story incorrectly identified Judge Michael Newmark. We regret the error