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An anticipated data-center boom is driving utility plans for massive natural gas investments in southeastern Wisconsin, raising objections from customer and climate advocates.
Critics say they’ve seen big development plans fail to pan out before, and they don’t want to be stuck paying for overbuilt fossil-fuel generation based on increasingly uncertain growth projections.
Wisconsin Electric Power Co. (WEPCO) says it needs to build new gas generation to power a planned $3.3 billion Microsoft data center near Mount Pleasant. The project is on the site of the failed Foxconn LCD screen factory, a proposed megaproject that President Donald Trump promised during his first term would become “the eighth wonder of the world” but that never materialized as planned.
“There’s a lot of healthy skepticism because of the Foxconn project never reaching anywhere near the scale that was being touted,” said Tom Content, executive director of the Citizens Utility Board. “People are asking, ‘Is this real this time?’”
Microsoft has already paused construction on the data center as it reevaluates the scope and how “recent changes in technology” may affect the project. A Chinese artificial-intelligence company in January announced a major breakthrough that it claims allows it to offer AI services with far less computing power, upending global assumptions about the industry’s electricity demand.
Microsoft is also proposing a data center in nearby Kenosha, and a developer called Cloverleaf Infrastructure is proposing one in nearby Port Washington. But the specifics of these data centers and their energy demand are not confirmed, hence critics say the utility hasn’t demonstrated that demand will increase enough to justify the roughly $2 billion in natural gas investments proposed by We Energies (WEPCO’s trade name). Critics also note that an influx of natural gas power seems to contradict Microsoft’s own climate goals of being carbon-negative by 2030.
“We Energies says they want to be ready for other potential customers but has provided no proof of who those customers are or what they want in terms of their energy sourcing,” said Gloria Randall-Hewitt, a resident who spoke at a March 25 hearing held by the Wisconsin Public Service Commission. These projects “carry huge price tags in terms of pollution, detrimental health outcomes, and rate increases for customers. They are asking us to just trust them.”
We Energies is looking to build a new five-turbine, 1,100-megawatt gas plant in Oak Creek on the same site as two large coal plants, one of which is closing this year. We Energies also plans to build a 128-MW gas plant in Paris, Wisconsin, 25 miles south of Oak Creek. The utility proposes serving the plants with a new liquefied natural gas storage terminal at the Oak Creek plant site, by Lake Michigan’s shore, and with a new 33-mile pipeline.
The Oak Creek gas plant would go online in 2027 or 2028, the utility says, and cost around $1.3 billion. The Paris plant, made up of seven reciprocating internal combustion engines, could go online next year, at a cost of roughly $300 million. WEPCO needs the storage terminal, which will cost about $520 million, to make sure the plants and residential customers have enough gas, as well as to meet requirements established by the Midcontinent Independent System Operator, which manages the region’s grid, utility spokesperson Brendan Conway said by email. The new pipeline would cost about $210 million.
The three-member Public Service Commission will decide whether to grant the utility the right to recoup those costs — and a profit — from ratepayers. After overwhelming turnout at the public hearing on Oak Creek, the commission extended the public comment period for the proposed plant through April 7. That was also the deadline for comments on the storage terminal, and the commission completed a comment period for the Paris proposal earlier this winter.
In an April 1 filing before the commission, We Energies said it forecasts 1,800 MW of increased demand in the next five years, and even if only 450 MW of that demand materializes, building the gas plants is the most cost effective way to meet it. Conway said the Oak Creek gas plant would save ratepayers $413 million compared to other alternatives.
But advocates don’t believe that and hope the commission orders the utility to consider other options and do more study.
“We understand there needs to be increased energy production to meet that load, but we want to make sure it’s the most cost-competitive suite of options, not just defaulting back to natural gas as a baseline,” said Emma Heins, principal at Advanced Energy United, an industry association representing transmission, generation, and transportation-related companies.
The Citizens Utility Board, Advanced Energy United, and other experts say the situation highlights Wisconsin’s lack of an integrated resource plan. Most states require utilities to undergo these comprehensive planning processes to meet predicted energy demand, but Wisconsin utilities simply bring proposals to regulators on a case-by-case basis. Advocates say centralized planning would avoid unnecessary generation investments and facilitate more investment in renewables.
“There’s a larger governance issue” in how decisions around energy infrastructure are made, said Courtney Brady, deputy director for the Midwest region at Evergreen Action, a nonprofit policy advocacy group. “That speaks to the fact that without an integrated resource plan in Wisconsin, you’re going to be more subject to these big proposals that could end up being costly unused infrastructure. I don’t think WEPCO has done their job in understanding the alternatives that exist, partly because they are not required by law to do so.”
We Energies currently gets only 5% of its energy from renewables, with 28% from coal and 37% from natural gas. Its investment in renewables lags behind other Wisconsin utilities like Xcel Energy, which generates half its energy carbon-free, and Madison Gas and Electric, which plans to be carbon neutral by 2050 and supplies the city of Madison with 24% renewable energy.
Conway said We Energies is investing over $9 billion in new renewable energy by 2029 and will eliminate coal-fired power by 2032. He said demand-response programs and renewables would still not be enough to meet the expected new demand.
“Now more than ever — it is critical for us to have quick-start gas plants available and running when the wind doesn’t blow and the sun doesn’t shine,” he said by email.
Heins noted that WEPCO was “one of the last utilities in the country to build a large-scale coal plant.” In 2011, it spent $2.3 billion on a new coal plant at the Oak Creek site; the utility now plans to convert that plant to natural gas “in the coming years,” Conway said. Around the same time it built that coal plant, WEPCO invested close to $1 billion in pollution controls for another Oak Creek coal plant that is closing this year, leaving ratepayers with $645 million in stranded costs, as noted in an analysis by think tank RMI.
“This utility has a history of being behind the times on technologies,” Heins said. “Our sentiment is a lot of energy options are being left on the table, technologies that can be implemented much faster than a natural gas plant.”
RMI’s analysis notes that under the utility’s proposal, customers will on average pay an extra $78 a year to finance the Oak Creek gas plant, but that amount could climb to $136 a year if fuel and equipment cost increases considered possible by the National Renewable Energy Laboratory come to pass. RMI and other experts note that U.S. plans to build more LNG terminals to facilitate exports also mean that gas prices will likely rise and become more volatile, to the detriment of U.S. ratepayers.
Conway noted that WEPCO filed a March 31 request with the Public Service Commission to approve a rate structure where data centers would pay for generation infrastructure planned to meet their needs. Content said the proposal is a step in the right direction but lamented that the gas projects could be approved long before there is any certainty about the new rate plan.
Residents testifying at the Oak Creek public hearing also expressed fears about the health impacts of new gas generation, especially since they have already spent years suffering air pollution from the nearby coal plants.
The closure of those coal plants is a victory for public health and the environment — one that would be undermined by the construction of unnecessary, polluting gas plants, said Abby Novinska-Lois, executive director of Healthy Climate Wisconsin, an advocacy group led by medical professionals
“This isn’t a transition,” she said. “This is a brand new health threat to the area that isn’t necessary when we have energy efficiency and clean energy alternatives that can also meet the demand.”
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