WEC CEO Says Oracle Will Meet Tough Data Center Finance Rules
Utility leader backs $15 billion Port Washington project despite lawsuit and credit downgrade.
This is an aerial rendering of what the planned data center campus in Port Washington could look like. Source: City of Port Washington
The head of the company that owns Wisconsin’s largest utility says he’s confident that tech giant Oracle will meet financial requirements for data centers imposed by state utility regulators.
Scott Lauber, president and CEO of WEC Energy Group, made the remarks Wednesday during an earnings call. The company owns Milwaukee-based We Energies, the state’s largest electric and natural gas utility.
In April, the Public Service Commission of Wisconsin approved a “very large customer” rate for We Energies that required data center developers in its territory to maintain a higher credit rating. Otherwise, they must post cash or a letter of credit to cover the cost of investments in new power plants built to serve their data centers in order to protect ratepayers.
Oracle is one of three developers partnering to build the $15 billion Lighthouse data center campus in Port Washington. The company has said it may need to post collateral in excess of $7 billion to meet the PSC requirements, and Lauber said he’s confident they can get that.
“Oracle has stated it remains committed to the project, paying its full share of energy and providing the financial support needed, so there’s no risk to other Wisconsin customers,” Lauber said. “We are actively working with Oracle to update their financial security in line with the PSCW requirements.”
In June, We Energies and data center developers petitioned regulators to reconsider the requirements. Not long after, Oracle sued to overturn them, saying they imposed “substantial and unreasonable” costs. The PSC didn’t act on the petition, and regulators accused the company of trying to avoid oversight in favor of the utility’s more lax requirements.
Tom Content, executive director of the Citizens Utility Board, said the utility executive reassured analysts that Oracle would meet requirements despite its lawsuit.
“I feel like Oracle didn’t want to have that tougher requirement. But now that it’s in place, they’re complying,” Content said. “That shows that the PSC taking a stronger stand to protect customers from risk is paying off, in my mind.”
On July 9, the tech company’s credit rating was downgraded to a BBB- rating, an investment-grade rating just above junk bond status. We Energies is working with Oracle to obtain either a letter of credit or cash deposit within 30 days of the downgrade.
Lauber acknowledged Oracle’s current rating is below even the utility’s proposed credit threshold.
“I don’t think they’re taken by surprise by that at all because we already had that as a provision in our filing,” Lauber said.
Meanwhile, WEC Energy Group has been in talks with three or four customers that are seeking to build data centers using up to 500 megawatts of power. That’s less than half the amount of energy needed to power the first phase of the Port Washington data center campus, which would demand 1.3 gigawatts or enough energy to power 640,000 homes.
Lauber said he doesn’t think the financial requirements or potential need to post collateral will be an issue long-term when asked if issues with Oracle are prompting any concerns.
“I don’t think it’s going to hurt at all as we look at those new customers,” Lauber said.
But attorneys for We Energies argued in its June petition that the commission’s changes to financial support requirements “would impose significant limits on billions of dollars of investment in the state.”
In the meantime, the utility executive said he didn’t think the lawsuit or financial requirements would affect the timeline for building the Port Washington data center campus. However, environmental groups have also sued the Wisconsin Department of Natural Resources over permits issued for the project.
Midwest Environmental Advocates sued the DNR on behalf of Sierra Club Wisconsin over the agency’s decision to grant approvals without conducting an environmental impact statement.
A Marquette Law School Poll this month shows 76 percent of voters in Wisconsin surveyed think the costs of data centers outweigh the benefits. Supporters have touted their potential to create jobs and generate tax revenue. The data center campus in Port Washington could create more than 4,000 construction jobs and more than 1,000 permanent positions.
Construction of the roughly 670-acre campus is slated to wrap up in 2028.
WEC Energy Group CEO confident Oracle will meet financial requirements for data centers was originally published by Wisconsin Public Radio.
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