All three members of the Public Service Commission criticized the lack of transparency from Meta and Alliant Energy during a meeting Thursday in which the body approved a contract for the social media giant to obtain power for its planned data center in Beaver Dam. 

Meta is in the process of spending more than $1 billion to construct a hyperscale data center campus that, when completed, would use six to eight times more power than the city of Beaver Dam’s current energy load. 

Like similar massive data center projects across the state, Meta’s Beaver Dam project has drawn opposition from local residents. For months, the project was shrouded in secrecy with Meta operating under the name Degas LLC. Opponents have complained about the lack of openness, the massive use of energy and the impact the construction and operation of the center could have on the community. 

PSC Chair Summer Strand said in her opening remarks she didn’t understand “why it needed to be this difficult” to achieve a transparent process. 

“To me, transparency is not a cliche, feel good, bare minimum, check the box concept,” Strand said. “If there’s one takeaway from our discussion and decisions today I want it to be clear that, whether you’re a large load customer coming into Wisconsin for the first time, or regulated entity familiar with our process, transparency — and by that I mean actual and real transparency — is the foundational expectation and a necessity.”

Commissioner Kristy Nieto said in her opening remarks Thursday morning that the case is one of the “most consequential” decisions the PSC has seen. 

“It bears repeating, existing Wisconsin customers should not pay a single cent to subsidize the service of data centers, not now and not decades from now,” Nieto said. “This means these very large customers must bear the full cost of the infrastructure required to serve them — generation, transmission and distribution — and that those costs must be fully and transparently assigned.” 

The three members of the commission lamented the redactions that had initially been made to the documents submitted in the case — which were later removed after objections from outside parties including members of the public, Clean Wisconsin and the Citizens Utility Board. 

The commissioners also decided that moving forward, hyperscale data centers constructed within Alliant’s territory must pay for and receive energy through a standardized tariff, rather than a one-off contract negotiated without public scrutiny. Late last month, the PSC made a similar ruling for large customers in WE Energies territory. 

Under the PSC order, Alliant will have to develop a tariff that applies for any data centers using more than 100 megawatts of energy. The Meta campus is expected to use 220 megawatts. 

“This is not going to be the last data center contract we see from this utility, and I will say Alliant needs standard guidelines and rules for its data center customers,” Nieto said. “A clear public tariff would create consistent, transparent rates and rules for future data centers, instead of handling each one through separate, confidential negotiations.”

While Alliant was ordered to develop a tariff rate for large customers, the PSC on Thursday approved the contract negotiated between Meta and Alliant with some modifications meant to insulate regular customers from bearing the costs of Meta’s energy use and any related infrastructure upgrades by Alliant. Nieto said denying the agreement while the tariff rate is developed would have allowed Meta to operate for up to a year without any guardrails, an outcome she said didn’t think would benefit anyone.

Brett Korte, a staff attorney with Clean Wisconsin, said the PSC putting a halt to the development of a case-by-case patchwork of data center energy deals in Alliant’s territory — which covers parts of more than a dozen Wisconsin counties — will protect Wisconsinites.

“Tariffs create a consistent, transparent framework that helps protect the public interest,” Korte said in a statement. “Without them, Wisconsin risks a patchwork system where costs and responsibilities are unclear and potentially shifted onto other utility customers.”

After the meeting, consumer advocacy and environmental groups were complimentary of the PSC’s actions.

“Today, the Public Service Commission highlighted the importance of transparency and oversight: accountability is a must, and it cannot be bypassed,” Britnie Remer, organizing director of climate advocacy group 350 Wisconsin. “The Commission also recognized that protecting Wisconsinites from subsidizing billion-dollar data centers needs to be front and center when it comes to these massive projects. With more data center proposals inevitable, requiring tariff filings in the future will ensure large energy customers pay for their costs, not our families and small businesses.”

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Wisconsin regulators on Thursday approved a one-off contract between Alliant Energy and the Meta subsidiary building a data center campus in Beaver Dam, but with a major caveat: Alliant must return with a standardized plan to power future data centers — and shield other customers from resulting costs.

The agreement bears little resemblance to the model We Energies proposed for its hyperscale data center customers in Mount Pleasant and Port Washington. That model covers all future We Energies data center customers and was approved last month with major modifications by the three-member Wisconsin Public Service Commission (PSC).

Both the PSC and ratepayer advocates expressed reservations about allowing Alliant to proceed without a standardized payment structure for data center customers. Negotiating contracts one-by-one, Commission Chair Summer Strand argued, would undermine the public’s interest in transparency and consistency.

Strand and fellow commissioners Kristy Nieto and Marcus Hawkins approved a modified version of the agreement, acknowledging that the Beaver Dam campus will open in 2027 with or without a tailored contract with Alliant. Sending the utility back to the drawing board for another year, they reasoned, could expose other customers to greater financial risk. The commissioners directed Alliant to propose a standardized payment structure for large data center customers similar to the We Energies arrangement approved last month.

Wisconsin Power and Light, an Alliant subsidiary, filed its case with the PSC last spring, months before Meta joined state and local officials in announcig its Beaver Dam data center campus.

The Beaver Dam facility, the first of its kind in Alliant’s Wisconsin service territory, is smaller than the soon-to-open Microsoft and Vantage data centers. Meta projects the facility will use 220 megawatts at peak, less than half the projected use of the Mount Pleasant and Port Washington campuses. But even that comparatively modest demand would be six to eight times the current peak for all of Beaver Dam.

In testimony to the PSC in November, Rebecca Valcq, Alliant’s assistant vice president for regulatory affairs and data center services, said the Beaver Dam campus would benefit other customers by “making more efficient use of existing infrastructure” and “spreading fixed costs” across a larger base. She also urged commissioners to consider the data center’s projected $2.1 million in annual local, state and federal tax revenue, among other economic benefits.

Alliant is a founding member of the Wisconsin Data Center Coalition, which promotes the state as a destination for data center developers.

Unlike We Energies, Alliant says it does not expect to immediately build new power plants to serve the Beaver Dam campus. Instead, Meta would purchase electricity from the same generators as the rest of Alliant’s customers. Hawkins noted on Thursday that even if the new data center doesn’t immediately require new generators, it might change the retirement timelines for Alliant’s existing power plants.

Contract negotiated in secret

The utility negotiated its contract with Meta behind closed doors. When it approached the PSC, it asked for approval without changes and requested extensive redactions, hiding many contract terms from the public. Alliant argued that the contract’s specific terms, and the surrounding secrecy, were needed to “attract and accommodate” Meta — and to compete with other states or utility territories courting data center development.

The redactions spurred pushback from ratepayer advocates and the PSC itself, which made more details of the contract available as the case progressed. In Thursday’s hearing, Strand drew parallels with the nondisclosure agreements some data center developers seek from local governments in Wisconsin, including Meta in Beaver Dam, which Wisconsin Watch first reported on in January.

“For some of these new private sector, big tech data center customers that are used to operating confidentially, coming into our state or coming into this process might be a shock to the system,” Strand said. “There is still this black-box approach that includes nondisclosure agreements, heavily redacted filings, corporate pseudonyms and negotiations shrouded in secrecy… This lack of transparency is hurting, not helping.”

The nonprofit law center Midwest Environmental Advocates in December sued the PSC to obtain unredacted documents from the Alliant case. That lawsuit is ongoing.

PSC adds protections, warns of gaps

Alliant proposed some protections for itself and non-data center customers. It set a floor for Alliant’s revenues from Meta, protecting the utility in a scenario in which the data center uses less electricity than initially anticipated.

That minimum covers the cost of building transmission lines to serve the data center. The American Transmission Company, the largest transmission operator in Wisconsin, is currently building a $200 million line to plug in the Beaver Dam campus.

Alliant also proposed requiring Meta to reimburse the utility for the costs of transmission infrastructure if the tech giant backs out of the Beaver Dam project before the new line is complete — and requiring Meta to put up collateral in case its credit rating falls.

The PSC agreed with those terms and added further protections, including requiring Alliant to regularly report on the costs of serving the Beaver Dam campus and leaving the door open for the commission to adjust the cost-sharing to shield other customers from unanticipated expenses.

Commissioners identified some ratepayer protections beyond what it has authority to require. The transmission buildout needed to serve data centers is largely outside of PSC jurisdiction. Much of that authority instead rests with the Federal Energy Regulatory Commission (FERC), which oversees transmission utilities nationwide, and the Midcontinent Independent Systems Operator (MISO), a nonprofit that manages much of the Midwest’s electrical grid.

MISO awarded the transmission line project that will serve the Beaver Dam data center to ATC, which spreads construction costs across all its Wisconsin customers, most of whom are outside Alliant’s territory. While Alliant’s new contract requires Meta to pay a minimum transmission fee to shield other Alliant customers from unexpected costs, those protections don’t extend to customers of other utilities using ATC’s transmission lines.

Alliant’s customers will also pick up “tens of millions of dollars” in transmission costs tied to data centers in other Wisconsin electrical utility territories, Hawkins said. “Whether or not that is appropriate — or something that we are being open-eyed about — is a concern of mine,” he added.

Commissioners on Thursday urged Alliant to begin discussions with ATC on a fairer method for distributing costs — one of the few options within commission authority.

The commission directed Alliant to produce a standardized plan before making agreements with new data center customers.

The PSC is aware that more data centers could come to Alliant’s turf.

“Evidence indicates there are 12 other potential data centers in this utility’s territory that are potentially in the works,” Nieto said. Given that future, she added, Alliant must “establish clear rates, terms and protections and provide transparency, regulatory clarity and public accountability as required when serving loads capable of reshaping a utility’s entire system.”

Ratepayer groups say PSC sent clear message

Ratepayer advocates welcomed Thursday’s decision while emphasizing the importance of the directive to outline a standardized payment structure for future data centers.

“While the PSC approved Alliant’s contract, with modifications, for Meta’s Beaver Dam data
center, the Commissioners recognized that continued one-off, bilateral contract
negotiations are not sufficiently protective of Wisconsin families and small businesses,” Brett Korte, a staff attorney with Clean Wisconsin, said in a press release.

“Today’s PSC decision requiring Alliant to develop a tariff for future data centers will result in a consistent, transparent framework that helps protect the public interest.”

Wisconsin Citizens Utility Board Executive Director Tom Content echoed commissioners’ hopes that Alliant and other electrical utilities will reach an agreement with ATC to protect non-data center customers from transmission-related cost shifts.

“We’re calling on ATC to protect customers across Wisconsin and Michigan to make sure people who aren’t even (customers of) these utilities aren’t on the hook,” he told Wisconsin Watch.

Alliant raised no immediate objections to the PSC’s changes.

“Protecting our customers while allowing communities to grow is central to our commitment at Alliant Energy, and that’s exactly what this contract is designed to do,” a spokesperson wrote in a statement on Thursday afternoon. “It maintains reliability, supports meaningful local economic benefits, and delivers benefits that help keep rates stable for all customers.”

In a quarterly earnings call last week, the company announced plans for a 370-megawatt electric service agreement with a data center customer in Iowa. Unlike Wisconsin’s PSC, Iowa’s utility regulator has been more open to one-off contracts between utilities and data centers.

By removing that option for Alliant’s future arrangements with data center customers, Content said, the PSC’s latest ruling could set a new standard for other utilities in the state.

“They’re sending a message,” he added. “None of this individual contract stuff.”

PSC approves Alliant–Meta data center power deal while criticizing ‘black box’ approach is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.