Microsoft Fights ATC's Data Center Transmission Cost Plan

Microsoft and Wisconsin’s Citizens Utility Board have asked federal regulators to reject a cost-recovery plan from American Transmission Co. and We Energies for Microsoft’s Mount Pleasant data center, arguing the mechanism could still leave other ratepayers covering part of the bill. The dispute, filed at the Federal Energy Regulatory Commission under Docket ER26-3265, is not about how much power the site needs. It is about who locks in payment for the wires before the load shows up.

Why it matters

ATC and We Energies proposed a minimum transmission charge that would require We Energies to pay ATC for the full transmission capacity Microsoft requested, whether or not the data center ever draws that much power, then pass that cost through to Microsoft over a 15-year arrangement. ATC calls it a “cost causer, cost payer” mechanism. Microsoft’s FERC filing says it never had input on the terms and that the agreement “must be adjusted so Microsoft, and every other large user, pays for the costs actually caused.” Citizens Utility Board director Corey Singletary told regulators ATC will “almost certainly undershoot the actual cost of data centers’ transmission needs” using standard interconnection rates, shifting the gap onto other customers. For developers, the fight signals that cost-allocation terms, not just interconnection queue position or megawatts available, are becoming a real gating factor in where hyperscale and colocation projects get sited.

The numbers

ATC says it will spend more than $500 million upgrading the grid connection for Mount Pleasant alone, part of a statewide push exceeding $2 billion in new lines, substations and upgrades tied to data-center load across roughly a dozen Wisconsin counties. Transmission charges already make up about 10% of a typical We Energies customer’s bill. The underlying FERC filing, Docket ER26-3265, covers Service Agreements 4200-4202, 4205 and 4810, the specific large-load cost-allocation and minimum-charge contracts now under challenge, filed July 24 with an August 14 comment deadline.

What’s next

The Wisconsin Public Service Commission told FERC the ATC-We Energies plan is “an improvement upon the status quo” but that “additional work is needed to achieve just and reasonable transmission rates.” FERC can approve the agreements, order changes, or send the dispute to a settlement judge, the outcome developers evaluating sites tracked on our national market page will be watching as a template for how minimum-charge contracts get written elsewhere.