We Energies’ Data Center Tariff

We Energies, formally Wisconsin Electric Power Company, proposed its Very Large Customer (VLC) and Bespoke Resources tariffs in March 2025 after multiple large data center prospects entered its service territory. The proceeding quickly became a statewide test case because proposed projects in Racine County, Kenosha, Milwaukee, and Port Washington were large enough that just two of them were projected to consume as much electricity as all We Energies residential customers statewide. ^[1][2][3]

Notable projects driving the tariff

The sheer scale of the projects entering We Energies' territory explains why regulators felt compelled to act. The docket was driven by two of the largest data center developments in U.S. history:

The Microsoft Mount Pleasant Campus: First announced in early 2023 with a $1 billion commitment on land originally slated for Foxconn, Microsoft's ambitions in Mount Pleasant rapidly ballooned. In May 2024, the company announced a $3.3 billion expansion, followed by another massive $4 billion pledge in September 2025 to build a distributed training supercomputer by 2028. With total investment estimates scaling up toward $20 billion over the next decade, the campus's eventual power needs are projected to hit an astonishing 2,600 MW across multiple phases. Even its earliest phases, requiring 450 MW by 2026, will make Microsoft the single largest energy user in the state.^[4][5][6][7]
The Vantage/OpenAI/Oracle "Stargate" Campus: In October 2025, Vantage Data Centers announced it would build a $15 billion, 672-acre campus in Port Washington, Wisconsin, to host OpenAI and Oracle workloads. The four-building site is designed to pull roughly 1,000 MW (1 GW) of power.^[8][9]

The bridge before the tariff: Custom agreements and the fragmented grid

Because these gigawatt-scale announcements arrived before any protective tariff existed, they had to be maneuvered through a fragmented set of ad hoc utility filings, custom service agreements, and separate regulatory dockets, each of which exposed ordinary Wisconsin ratepayers to real costs. To understand why, it helps to understand how We Energies' grid is actually structured.^[10][11]

While We Energies owns the power plants (generation) and the local, lower-voltage infrastructure (distribution), it does not own the massive high-voltage transmission network. In 2001, Wisconsin utilities transferred their transmission assets into a standalone company, American Transmission Co. (ATC), which now owns and operates the high-voltage grid across the state as an independent Transmission Owner (TO) within MISO. So, ATC sells transmission service to utilities like We Energies, who in turn bundle that cost into the retail rates they charge end-use customers. When a data center arrives, all three layers — generation, transmission, and distribution — require separate approvals, separate dockets, and separate cost recovery decisions. That three-layer fragmentation is exactly what made regulating hyperscale load one project at a time so costly and so politically exposed.^[12][13][14]

Generation ($1.5 billion, explicitly on ratepayers before the tariff fixed it). The Mount Pleasant load also required new baseline power. We Energies filed for a Certificate of Public Convenience and Necessity (CPCN) and won PSC approval in May 2025 to build a 1,100 MW gas plant in Oak Creek and a 128 MW plant in Paris, Kenosha County, for a combined cost of approximately $1.5 billion. The PSC approved both plants as being in the public interest. The critical detail: We Energies proposed to recover both through the general rate base, meaning all 1.1 million Wisconsin electric customers would pay for the plants through their monthly bills. Under the utility's pre-tariff structure, data centers would eventually pay 75% of the capital cost once a formal tariff was approved, but that still left 25% of the capital cost and 100% of the fuel and operating expenses falling on ordinary ratepayers.^{[15][16][17][18][19]}

Transmission (ATC's $2 billion+, a separate leakage problem entirely). Simultaneously, ATC was mapping out more than $2 billion in new transmission projects triggered by data center demand in Wisconsin, including a $1.4 billion line for the Vantage/Port Washington site. Before the tariff was approved, ATC's construction financing costs were pooled into the general transmission rate base, meaning all MISO customers were indirectly subsidizing the cost of building transmission for hyperscalers during the construction period. The PSC's own analysis found that by 2027, existing We Energies customers would likely pay $63 million for data center-driven transmission infrastructure, rising toward $100 million by 2028.^[13][14][10]

Distribution ($335 million, initially on ratepayers). Before the VLC tariff existed, We Energies filed to spend $335 million building dedicated distribution infrastructure for the Microsoft campus, including the custom feeder lines and step-down transformers required to wire the site. The first phase of this work was advanced under a Foxconn-era 2017 legislative exemption that waived PSC approval for construction within the special economic zone, allowing We Energies to begin roughly $100 million of work without standard regulatory scrutiny. Critically, the utility stated that the cost of this work would be recovered through distribution rates, meaning the capital would flow through the general rate base and existing customers would pay their proportional share until Microsoft was billed at an appropriate rate.^[20][21]

Why this made the tariff urgent

By the time the VLC tariff docket opened in early 2025, it was clear that the pre-tariff framework had three distinct cost-shifting leaks, one at each layer of the grid. Ratepayers were absorbing distribution capital, sharing generation capital, and fully funding ATC transmission construction during build periods. Each project required a one-off approval fight, and each one left a different-sized hole in the ratepayer firewall. The formal two-tariff structure was designed precisely to seal all three simultaneously.^[14][22][13]

The original proposal and the two-tariff design

To solve a problem of this magnitude, We Energies did not propose a single rate plan. It proposed two linked tariffs designed to work together like a lock and a key. Understanding the difference between them is the only way to understand the controversy that followed.^[23][24]

The VLC tariff was the envelope for the customer. It defined who qualified as a hyperscaler, established the minimum contract term, and set the baseline rates for simply connecting to the utility's transmission grid.^[24][25]

The Bespoke Resources tariff was the engine for the power plants. Because these new customers were too massive to be served by the existing grid, We Energies needed to build dedicated, custom power plants just for them. This second tariff governed how those specific generation assets would be built, subscribed to, and paid for by the VLC customer.^[26][24]

Under the first filing, We Energies proposed a 500 MW threshold for the VLC tariff, with some flexibility for loads between 250 MW and 500 MW, and a 10-year minimum term.^[19][1]

But the real flashpoint lived inside the Bespoke Resources tariff. Most controversially, the utility offered a "capacity-only" option. Under this model, the data center would pay only 75 percent of the capital cost of its custom-built generating facilities. Ordinary ratepayers would shoulder the remaining 25 percent of the construction costs and take on the fuel and operating expenses, based on the utility's theory that the new power plant might occasionally benefit the broader grid. Critics immediately recognized this as a classic cost-shift in disguise.^[22][27]

PSC overhaul

On April 24, 2026, the Public Service Commission of Wisconsin approved the tariffs, but only after materially rewriting them to protect existing customers. The Commission’s decision is best understood not as an endorsement of We Energies’ original filing, but as a regulatory overhaul of it.^[22]

The PSC made several major changes:

It extended the minimum initial term to 15 years.^[1]
It lowered the eligibility threshold from 500 MW to 100 MW, making the tariff mandatory for a broader set of large loads.^[1][22]
It rejected the capacity-only structure and approved the full-benefits resource model instead, requiring VLCs to pay 100 percent of the costs of the resources built to serve them.^[28][1]
It required tariff revisions to address the risk of transmission cost shifting from data center customers to existing customers.^[1]
It imposed additional reporting requirements so the PSC can monitor how the tariffs work in practice and revisit them if needed.^[22][1]

Core mechanics

The approved framework is built around the idea that a very large customer should pay the full cost of the system built for it. That includes generation, and increasingly, transmission-related costs that might otherwise leak back into broader rates.^[28]

1. Applicability
The tariff now applies to customers at 100 MW or above, a major reduction from the original 500 MW trigger. This matters because many hyperscale data center campuses may phase in below 500 MW initially, and the Commission wanted the protective tariff to capture those projects earlier rather than letting them remain on standard industrial rates.^[19][1]

2. Contract term
The PSC increased the minimum service term from 10 years to 15 years. The logic is straightforward: if a utility builds long-lived infrastructure for a single hyperscale load, a shorter term raises the risk that the customer exits before those costs are recovered, leaving the residual burden to others.^[28][1]

3. Generation cost allocation
This was the heart of the fight. Under the original proposal, the capacity-only option would have let data centers pay 75 percent of the capital cost of new generation, while other ratepayers paid the other 25 percent and took on fuel-cost exposure. The PSC rejected that approach and required the full-benefits model, under which the large customer pays 100 percent of the costs associated with the bespoke resources built for it.^[26][28][1]

4. Transmission cost responsibility
The Commission specifically required We Energies to revise the tariff to address transmission cost shifting risk. That issue is especially important because even if a utility directly assigns local interconnection facilities, broader transmission upgrades can otherwise become a backdoor avenue for cost socialization if not explicitly fenced off.^[28][1]

5. Transparency and reporting
The PSC added reporting requirements to improve visibility into how the tariffs operate and into agreements between the utility and VLC customers. That means Wisconsin did not just create a tariff. It created an ongoing oversight mechanism so regulators can see whether the promised customer protections hold up in practice.^[22][1]

Bespoke resources

The linked Bespoke Resources tariff is what makes the Wisconsin structure distinct. Instead of simply charging a higher bundled retail rate, the framework contemplates building generation resources specifically to satisfy the large customer’s load and associated planning requirements. Under the approved approach, the customer must bear the full cost of those bespoke resources rather than passing part of the burden to the public.^[23][26]

In the original filing, We Energies argued that other customers would also benefit from those new resources and therefore could fairly bear a share of the cost. The PSC rejected that logic as insufficiently protective and instead required the utility to align cost recovery with cost causation much more tightly.^[1][22]

Financial protections

One important post-order development is that We Energies has already asked the PSC to revisit credit rating and financial guarantee requirements for data center developers. Wisconsin Watch reported that the approved structure requires data center developers with credit ratings below A- to post financial guarantees, either in cash or lines of credit, to protect against cost shifting if the developer encounters financial trouble.^[29]

That detail matters because it shows Wisconsin is not relying only on rate design. It is also trying to manage counterparty risk directly. In other words, the PSC is not just asking whether the tariff covers costs on paper. It is asking whether the customer is financially capable of honoring the obligations over time.^[29]

Strategic significance

We Energies’ VLC tariff may become the Wisconsin baseline for all future utility data center tariffs, including eventual Xcel Wisconsin filings. It also illustrates a broader national shift: early large load tariffs often gave utilities room to argue that the system-wide benefits of hyperscale development justified partial socialization of costs, but regulators are increasingly demanding much tighter cost assignment, longer terms, stronger credit protections, and explicit transparency tools.^[22][28][1]

In that sense, Wisconsin moved from a relatively utility-friendly first draft to a more regulator-driven final framework. The result is a tariff that still enables data center growth, but only on the condition that very large customers fund the infrastructure and resource buildout they require.^[30][1]

Tariff Snapshot

Tariff Provision	We Energies (Wisconsin)
Regulatory Status	Approved with major modifications on April 24, 2026 (Docket 6630-TE-113) ^[1]
RTO Context	MISO ^[12]
Mandatory Threshold	100 MW (lowered by the PSC from the utility's proposed 500 MW) ^[1]
Secondary Tier	Not explicitly tiered below 100 MW in the final order; 100 MW serves as the hard floor ^[1]
Pre-Service Contracts	Customer must enroll in the VLC rate class and execute a binding Bespoke Resources agreement ^[24][26]
Study Deposits	Governed by standard MISO/utility interconnection queue rules rather than a separate explicit tariff fee ^[1]
Financial Security	Developers with credit ratings below A- must post strict financial guarantees (cash or lines of credit) ^[29]
Generation Costs	100% customer-funded. The PSC rejected the "capacity-only" option and required the "Full-Benefit" model for bespoke power plants ^[1][28]
Transmission Costs	100% customer-funded. The PSC explicitly ordered tariff revisions to prevent any transmission cost-shifting to existing ratepayers ^[1][13]
Minimum Contract Term	15 years (increased by the PSC from the proposed 10 years) ^[1]
Minimum Demand Ratchet	Includes a minimum billing demand charge for transmission fees requiring payment on projected use or actual use, whichever is higher ^[31]
Early Exit Fee	Customer remains liable for the 100% cost recovery of the bespoke assets over the 15-year term ^[1][28]
Anti-Speculation Firewall	Minimum billing demand ratchet (pay for projected load), A- credit rating threshold for financial guarantees, plus mandatory PSC reporting ^[1][29][31]
Clean Energy Provision	Bespoke resources are inherently tailored, allowing the utility to build specific clean generation to meet a hyperscaler's ESG goals ^[23]
Rate Classification	Placed in the newly created standalone "Very Large Customer" (VLC) rate class ^[1][24]