What's Happening?
Wisconsin’s Public Service Commission has approved a roughly 7% increase in We Energies’ electricity rates spread across 2027 and 2028, a reduction from the utility's initial proposal of a 9% overall increase.
This marks the utility’s sixth consecutive rate hike. The commission pushed back on several of We Energies' requests, including lowering the utility's guaranteed 'rate of return' for shareholders from a requested 9.9% to 9.5%, saving ratepayers approximately $60 million. Regulators also rejected We Energies' plan to bill ratepayers for a quarter of the costs of new power plants for data centers, instead ordering these costs to be assigned directly to large data center customers. Additionally, the commission limited shareholder profits on cost overruns for renewable energy projects and extended the timeline for We Energies to recoup investments in retired power plants, saving ratepayers an estimated $30 million by 2028. The Federal Energy Regulatory Commission (FERC) is separately considering a proposal from the American Transmission Company to charge data center operators based on projected transmission needs, a plan Microsoft has opposed.
Why It's Important?
This decision by the Wisconsin Public Service Commission is significant for over a million We Energies customers in Wisconsin, Michigan, and Illinois, as it directly impacts their monthly electricity bills. The commission's actions reflect a growing concern over the cumulative effect of rate increases and the balance between utility profits and consumer affordability. By limiting the rate of return and assigning data center infrastructure costs directly to those customers, regulators aim to prevent other ratepayers from subsidizing the energy demands of large tech companies. The pushback on cost overruns for renewable projects, particularly the decision to bar profit on unapproved spending, sets a precedent for greater utility transparency and accountability in project budgeting. The ongoing debate at FERC regarding transmission costs for data centers highlights a national challenge in allocating infrastructure expenses in an era of increasing energy demand from the tech sector.
What's Next?
We Energies customers can expect their monthly bills to rise by $7-$8 in 2027 and an additional $6-$7 in 2028. The utility plans to direct new revenue towards renewable energy, natural gas, and battery storage projects, with a projected $10 billion increase in capital spending over the next five years. The Public Service Commission's chair has called for an overhaul of the state’s utility regulation rules, suggesting potential legislative changes in the future, especially with a new Democratic trifecta in state government. The agreement between We Energies and Oracle regarding the Point Beach Nuclear Plant's electricity output is still awaiting commission approval and could save ratepayers an estimated $300 million in fuel costs over five years. The Federal Energy Regulatory Commission's decision on the American Transmission Company's proposal for data center transmission charges will also be a critical development, potentially influencing how such costs are distributed across the U.S. grid.
Beyond the Headlines
The regulatory decisions in Wisconsin reflect a broader national conversation about who bears the cost of modernizing and expanding energy infrastructure, particularly with the rise of energy-intensive data centers. The commission's efforts to protect residential ratepayers from these costs, while also scrutinizing utility spending and shareholder profits, highlight the evolving role of state utility commissions. The issue of 'stranded assets' from retired power plants also points to the long-term financial burdens associated with transitioning away from fossil fuels. The involvement of federal regulators like FERC in transmission cost allocation for data centers underscores the interconnectedness of state and federal energy policies. This case could serve as a model or cautionary tale for other states grappling with similar challenges in balancing energy development, affordability, and environmental goals.
