Wisconsin needs rules for the data center boom before customers get the bill

By John Imes

Wisconsin has an opportunity to participate in one of the largest technology investment waves in a generation.

Artificial intelligence and cloud computing are driving enormous new data center development. These projects can bring investment, jobs and tax revenue. They can also require unprecedented amounts of electricity, along with new power plants, transmission lines, substations, water infrastructure and other public investments.

The opportunity is real.

So is the bill.

For Wisconsin policymakers, the central question is not whether the digital economy should grow. It is who pays for that growth, who benefits and who bears the risk.

Wisconsinites are increasingly asking the same question. The latest Marquette Law School Poll found that 78% of registered voters believe the costs of data centers outweigh the benefits, up from 76% in July. Majorities of Republicans, independents and Democrats agree.

That level of concern should get the attention of legislators, regulators and local officials alike.

Affordability should be our North Star

Data centers can require billions of dollars in new energy infrastructure. Under traditional utility models, some of those costs can eventually be spread across everyone’s electric bills.

Wisconsin families, farmers, manufacturers and small businesses should not be asked to subsidize infrastructure built primarily to serve some of the largest and most profitable companies in the world.

The principle should be simple:

Large energy users should pay the full costs they create.

The Public Service Commission has already taken an important step in that direction. Commissioner Kristy Nieto put the principle plainly: existing Wisconsin customers should “not pay a single cent” to subsidize data center service. The Commission has begun backing that principle with stronger requirements that large customers bear the costs of generation and other infrastructure required to serve them.

That is an important precedent.

Now Wisconsin should apply the same standard consistently across generation, transmission, substations, water infrastructure, tax incentives and other public costs associated with data center growth.

Responsible companies should welcome clear and predictable rules. Some technology companies have voluntarily committed to paying for their power needs and grid upgrades. But voluntary pledges are no substitute for statewide standards that apply equally to everyone.

Cost accountability must also extend to risk.

Data center forecasts can change. Projects can shrink, be delayed or disappear. Technologies evolve. Corporate strategies shift.

Yet utilities may make multibillion-dollar investments in power plants and transmission infrastructure based on projected electricity demand years into the future. If that demand never materializes, Wisconsin households and businesses should not inherit the cost of stranded assets.

Private profit should not depend on public risk.

That is not anti-business. It is basic market discipline.

Wisconsin should also reject the assumption that every projected megawatt of new demand automatically requires another conventional power plant.

Data centers are unusually sophisticated energy users. Batteries, workload shifting, thermal storage and advanced controls can reduce demand during the hours when the grid is most stressed. New facilities can also be paired with new generation and storage, adding supply while reducing pressure on the existing system.

The policy question is not simply renewables versus fossil fuels.

It is: What combination of generation, storage, efficiency, transmission and demand flexibility provides Wisconsin the greatest reliability at the lowest total cost?

That question should be answered through comprehensive planning before billions of dollars are committed. Reliability requires planning, not assumptions.

Data center development also presents a governance challenge.

Local officials should not be left to negotiate individually with companies worth hundreds of billions of dollars without clear statewide standards or adequate technical resources. Residents should not first learn the details of a massive development after nondisclosure agreements have been signed and major commitments made.

Developers should disclose projected electricity demand, water use, infrastructure requirements, tax arrangements and long-term community impacts before decisions become difficult to reverse.

Community benefits should be public, measurable and enforceable.

Transparency is sometimes portrayed as an obstacle to economic development. The opposite is true.

Businesses benefit from predictable rules. Communities benefit from meaningful participation. Developers benefit when expectations are established before projects become politically contentious.

Wisconsin still has an opportunity to establish these rules while the industry is taking shape.

The Clean Economy Coalition of Wisconsin’s Data Center Accountability Framework offers a useful starting point: protect existing ratepayers, require cost accountability, strengthen transparency, protect water and farmland, require clean energy and give communities a meaningful voice.

Those principles should inform the work of the PSC, the Legislature, state agencies and local governments as Wisconsin considers the next wave of data center development.

They are not barriers to investment. They are the foundation for responsible growth. Wisconsin does not need to choose between technological leadership and public accountability.

We can welcome data center investment while protecting existing utility customers. We can strengthen reliability while requiring clean energy resources. We can create jobs while protecting water, farmland and community interests. And we can require companies creating extraordinary new costs to bear those costs rather than shifting them onto everyone else.

The durable position is not to stop the data center boom. It is to set the rules for the data center boom.

Wisconsin should do that now, before enormous infrastructure commitments become sunk costs and before higher bills arrive on kitchen tables and business balance sheets.

The principles are straightforward: affordability, accountability, reliability and transparency.

Data centers can be part of Wisconsin’s economic future.

But growth works best when the rules are clear, communities have a voice and costs land where they belong.

Imes is director of the Wisconsin Environmental Initiative and former village president of Shorewood Hills. He provided written testimony to Congress on data centers for the American Sustainable Business Network.