Wisconsin electric rates in focus as Microsoft plans 15 new data centers
Local authorities in Mount Pleasant, Wisconsin gave the green light Monday for Microsoft to expand its data center footprint on the site originally planned for a Foxconn factory. The approval for 15 new data centers comes as state regulators weigh changes to electricity rates from the regional utility company, We Energies.
Microsoft’s 15 new data centers are billed at $13 billion of taxable value, on top of $7 billion in data centers already under construction in Mount Pleasant. The project will create thousands of construction jobs over the next decade and several hundred permanent jobs for technicians and engineers. The potential property tax revenue makes data centers an attractive economic engine, even if the amount of permanent jobs is modest compared to the size of facilities.
As data centers look to expand, the biggest barrier is finding enough electricity to power them. And even if new resources to generate electricity can be built, the question becomes: Who will pay for it? Electricity prices continue to be a major driver of inflation and a thorny political issue. State and federal lawmakers recognize the need to ensure that Big Tech pays its fair share. In Wisconsin, these issues take on extra significance because the Mount Pleasant community has been let down by corporate promises before.
History of the location
In 2017, Taiwanese technology company Foxconn came to Mount Pleasant, a village of about 27,000 people south of Milwaukee. The company promised a $10 billion investment and 13,000 jobs in a factory manufacturing flat screen televisions.
To make room, the municipal government used eminent domain to clear four square miles of residences and farmland. Then village officials voted to give the land to Foxconn.
More than $1.2 billion in state and local taxpayer dollars went to infrastructure upgrades like roads, water, sewer and electrical systems to accommodate the new factory.
The promised jobs never came. Foxconn’s plans for the site were continually scaled back. The last update on Foxconn Wisconsin’s official website was posted in 2021. Last year, NBC News reported that the company now employs fewer than 1,200 people in the area.
In 2023, Foxconn sold 1,000 acres of its land to Microsoft for $100 million.
Data centers in Wisconsin
The state of Wisconsin offers favorable incentives for data centers after the legislature approved sales and use tax exemptions in 2023.
Developers that invest from $50 to $150 million over five years are eligible for exemptions from sales tax for components needed to build and run a data center. The electricity needed to run the data center can also come tax free.
As a result, it’s estimated that the tax collected from a typical data center is reduced by $8.5 million during construction, and then $735,000 during a normal operating year, the nonprofit newsroom Wisconsin Watch reported.
Wisconsin currently has $57.6 billion in new data center proposals, according to Wisconsin Watch. In addition to Microsoft, Big Tech players Meta, OpenAI and Oracle have operations in the Badger State.
Impact on electric rates
In a blog post earlier this month, Microsoft pledged, “we’ll pay our way to ensure our data centers don’t increase your electricity prices.”
The utility company serving Mount Pleasant and other data centers in the Milwaukee area filed for new electric rates, which it said will prevent costs from being shifted to current customers.
But Tom Content, executive director of the watchdog nonprofit Citizens Utility Board of Wisconsin, said his group has “found loopholes where we think customers will end up being on the hook for costs.”
Under the We Energies proposal, data center companies pay for new power plants needed to run their facilities, and they pay for all electricity they consume as well as new distribution infrastructure enabling power to reach the site.
Content’s concerns center around fuel costs for new power plants and upgrades to transmission lines, which he said could be passed to other customers. Between Microsoft’s data centers and an OpenAI and Oracle project in Port Washington, Wisconsin, the total electric demand on We Energies’ grid — serving over a million households — is expected to roughly double.
The state utility commission recently approved two new natural gas plants, expected to cost $1.5 billion.
Content told Straight Arrow News that he is concerned that consumers could end up on the hook for excess, leftover costs if an “AI bubble” pops, or technological improvements lead to data centers using less electricity. He noted that Wisconsinites are still paying for a power plant that shut down in 2018.
“Affordability is on everybody’s minds,” Content said. “Customers could be on the hook for billions of an overbuilt power system.”
The post Wisconsin electric rates in focus as Microsoft plans 15 new data centers appeared first on Straight Arrow News.
Ella Rae Greene, Editor In Chief
