Homeless Issues Committee - Regular Meeting

And good afternoon, everyone. Welcome to our meeting. I'm going to get us called to order here. The chair should be here shortly, but we will call the order and go through roll call.

Okay. Shanahan.

Here.

Gallagher.

Here.

Kelm Nelson. Here. Singletary. Here. Richson. Present. Postler. Postler here. Yelk. Here. Marin.

Here.

Inaro.

Here.

Scandura. Here.

Here.

Bradshaw indicated he was going to be absent. Abate?

Here.

And Chair Miles, I know, is on the way, so we will probably mark him as present in the minutes, but he is correct.

We'll see.

En route.

All right. Well, thank you, everyone, for being here. That brings us on to Item B, the consideration of minutes from July 14th.

And would somebody like to make a motion? Rich, send motion to approve. Tom Nelson, second.

Got a motion by Richson and a second by Kelm Nelson. Are there any additions, corrections? Hearing none, all in favor of approval of the minutes from July 14th, say aye. Aye. And any opposed? And the motion has carried and those minutes have been approved. And then in speaking with Majid, action items, I don't think we really have any of those reports to task force at this time, unless anyone out there has anything. Which brings us to the status on prior follow-up items and requests, which I think the only note there was just the water topic was a big one. And so we may have to do a little unpacking there later. going forward. Did anyone else have follow-up items or requests for the committee?

All right, we're doing good.

All right, so that brings us on to our presentation and discussion section, and we will get started with the Citizens Utility Board of Wisconsin, Corey Singletary, who is here with us, Director of Regulatory Affairs. So welcome, Corey, and thank you.

floor is yours yeah thanks um i apologize i haven't been able to make the meetings up to this point um it unfortunately conflicts with the standing meeting i have with our national association i'm going to get this shared here that sounds like i might be too close to the microphone

There we go. All right. In talking with

know other folks this is possible that this may be something that uh you know i'm always open for additional conversation or if we want to circle back on this but um what i wanted to kind of present with to you today was the sort of issue of data centers uh from the perspective of sort of utility regulation so that you guys have so you know the committee has um sort of a baseline of understanding for the opportunities for engagement, the opportunities for being able to change the trajectory of things or add or modify policy or anything that you might like to do, I'm definitely if you have questions feel free to ask them but I'm going to ask that unless it's a burning one to try to hold it until the end because it's it's possible that I may answer a question that you may have. In a in a in a subsequent portion of the presentation I have for folks who aren't familiar who are as familiar with utility regulation citizens utility board is. was created by the Wisconsin legislature in 1979 to be the statewide consumer advocate for residential and small business consumers. It's a little different tack than a lot of other states took, which was for the legislature to create an office within their attorney general's office or something like that. But we serve that same sort of function in terms of advocating for customers. So... In terms of level setting, I'm gonna kind of back up a little bit just to make certain everyone's kind of on the same page, right? So in the utility space, we talk a lot about the regulatory compact, and this will become important. The reason why I'm talking about this will become clear in a second. In the highest level, simplest terms, right, we're all familiar with utilities have a monopoly franchise, right? They have an exclusive monopoly service territory. They're the only ones that can provide utility service in that area, whether that be electric, gas, water, sewer, and so forth, all right? So the utilities under our regulatory framework get that exclusive monopoly franchise. And in exchange, essentially, the utilities give, what they give is that they have an obligation to serve, right? And there's a lot of things under that obligation to serve. And the structure within which all of that lives is sort of the state rate regulation as well as federal utility rate regulation. And what I mean by rate regulation is essentially if you can think of anything that at the end of the day that would trickle down to affect the amount of money that a customer would pay on their bills in 2020, Most cases, either a state or a federal utility commission has regulatory authority to make decisions about whether the utility is allowed to take those actions that would impact the customer's bill. It's kind of in legalese. It's very nicely summed up by WSDAT 19603, which states that a public utility shall furnish reasonably adequate service The charges for, in this case, we're talking about electricity mostly, but also water. The charge for that utility service provided shall be reasonable and just, and correspondingly every unjust and unreasonable charge is prohibited and unlawful. SO THAT REASONABLY ADEQUATE SERVICE PART KIND OF CIRCLES BACK TO THAT OBLIGATION TO SERVE. IF YOU HAVE BEEN FOLLOWING IN THE PRESS, YOU MAY HAVE SEEN COMMENTS FROM THE UTILITIES, WE TAKE OUR OBLIGATION TO SERVE OUR CUSTOMERS VERY SERIOUSLY, THOSE TYPES OF STATEMENTS. If a customer of any kind comes to them within their service territory and wants utility service, they are obligated to provide it. They can't say, we don't like your business. We can't say that would be inconvenient. They have to provide it in a non-discriminatory manner and charge rates that are regulated by the commission. The second part I've highlighted here, this reasonable and just, or usually we invert that, we say just and reasonable. That gets into maybe more of the policy side of things where I think the committee's interest lies a little more. And so the commission's job is to make certain that the regulation and the rates for utilities are just and reasonable, all right? Now, what does that mean? Just in reasonable standard, that definition is widely open to interpretation, and it is generally open to interpretation by whoever the regulator is. Right. But in general, what that means is that the utility regulator takes in evidence from stakeholders, stakeholders including the utility, consumer advocates, commission staff, members of the community individually or as a collective, other advocacy groups like Clean Wisconsin, for example. And their decision-making must be informed by that testimony. So when you see your rates go up or the commission approves a power plant or transmission line to interconnect a data center, the decision they make has to be based upon that technical evidence in the record and those decisions have to be supported by substantial evidence. And one of the little wrinkles in our universe that people, it takes a little bit to grasp onto is that the decision makers can only make decisions based off of the record that's before them. So if they read something in the paper, they read a book, something like that, it's not in the record, even their own personal knowledge. they cannot rely upon that to make a decision. So when they're facing, for example, a proposal for a new rate for a data center or, again, we're dealing with right now a transmission land project in the eastern half of the state for the Lighthouse project, all those things, The documents that the parties put into the record, that's the only thing they can rely upon, right? And then the last little bit, again, sometimes it takes folks a bit for it to click, is just and reasonable doesn't necessarily mean from any one person's perspective the most reasonable, right? It all comes down to what the decision makers, in this case the regulators, think is supportable by the evidence, all right? So when data centers or large load customers come to Wisconsin or come to any utility service territory, the utility has an obligation to serve. And in considering any change, investment, any action by the utility to support that service, The commission has an obligation to set rates for that utility to provide the utility an opportunity to recover their cost of service, basically the cost of actually providing the electricity or gas or water, all right, as well as an opportunity to earn an investment on capital investments, sorry, earn a return on capital investments. And then the one little sort of, if anyone's an attorney, it's the rates have to provide an opportunity to recover those. Nothing is guaranteed. But essentially, periodically, those are set so as to make certain that the cost of service as well as a reasonable return is collected through rates. And then the commission's obligation to the customer is guaranteed. at the end of the day, just and reasonable rates, but also ensuring that the utility is meeting their obligation to serve, which includes safe and reliable service. There's sort of a third category beyond sort of what the utility has to do or the rates for the utility and making certain that there's sort of just and reasonable rates for the customer is this notion of the public interest, which is, again, much like, you know, just and reasonable is sort of broadly interpretable. But I wanted to put this up here because when folks, if you read stuff, if you really start digging into utility regulation stuff and rate making and decision making by utility commissions, you may see this notion of the public interest. And you might think, okay, that covers my specific issue area or my concern that I view as being of more public concern. right but in the utility regulatory space the public interest and i borrowed this definition from uh scott hempling who is a respected uh legal um scholar and former commissioner um he had a nice set of definitions here but it generally includes things like economic efficiency trying to aligning the utility and sorry the shareholder and and customers interests um sort of reasonable outcomes that are sort of replicable and can be sort of anticipated and it's not sort of jerking things around. And that, you know, it really is more about at the end of the day sort of having regulation be sort of a substitute for competition or having ideally the outcome be replicating competitive outcomes. So I just wanted to hit that because if, for example, your particular area of interest related to data centers is water consumption, is environmental impacts from new generation, is land use from transmission or distribution and things like that, The way that the commission would consider that under the auspices of public interest is very narrowly scoped. And that's part of their charge, right? Like their authority is very sort of narrow. So admittedly, this is a little bit of a click baity title on this slide here. So when what we're the reason I'm assuming we're all sitting here talking about data centers today isn't necessarily data centers themselves because we've had data centers in this country for. decades, it's more about the more recent development of what we often refer to as hyperscalers or hyperscale data centers, that instead of being 50, 100, maybe a couple hundred megawatts in peak demand, which is still very large, We're talking about some of the projects like what we've seen in Wisconsin, right, with the Microsoft project in Kenosha, the Lighthouse project in Port Washington, the QTS project that was, at least at the moment, is sort of a project like that is on pause. That sort of gigawatt or 1,000 megawatt or larger in terms of peak demand is the point of concern. And I wanted to bring this up because the things that from a rate payer and a customer perspective are driven by the characteristics of those data centers, not the fact that they're data centers themselves, right? This is actually from a resolution that our Consumer Advocate National Association just passed two weeks ago, if I remember correctly. And we went through and really tried to put some thought into really what is the source of the problem. And it's the fact that the type of customer that a data center is, or in this case a large load or hyperscale load, is very different from what we've historically seen in the utility system. By way of context, or to set some context, up until we started seeing hyperscale data centers come into Wisconsin, the largest load customers we had in any one of our large utilities was about 70 megawatts peak demand. 50 to 75, depending on the utility. For example, Charter Steel in Milwaukee is in that 50 to 70 megawatt range, right? They have that big electric arc furnace that they can turn on. Epic Systems, their entire campus, right? If you think about that city that's basically out there, that's... Also somewhere probably in the 50 to, I would think these days, I don't have specific customer numbers, but it's probably, again, in that 50 to 75 megawatt sort of range, right? So to kind of give you some sense of scale, okay? So very large, typically sustained high load factor usage. They're very geographically clustered or dense, right? So... think about um we energies as a utility just because i have the numbers off the top of my head or maybe alliance alliance is about a 2.4 gigawatts a 2.6 gigawatt system all right it took us what 100 years to get there in terms of the utility system all right um the qts project had it gone through uh plus the metadata center in dane county would have together at the end of the day, added up to about 40% of what Alliant Energy's load would have been once those projects were fully up and running. So they're highly concentrated. You have one customer, when they flip the switch, a lot of things move. So that's another thing that's different from what we've seen in the past. The fact that individual customers can drive the need for significant investment, the kind of investment that normally you would accumulate the need for over the course of decades because you brought on hundreds or thousands of individual customers. And then things like the development timelines, uncertainty about the load, all of those. Right, so it's the characteristics about these hyperscale data centers that are causing the problems and likely other problems that we're concerned about, right, in Dane County. This just kind of goes a little bit more in detail. Another aspect of them is they tend to be, although this is changing a little bit with AI training load, is they tend to be high load factor. What that means is their load factor is essentially how does your AVERAGE COMPARED TO YOUR PEAK RIGHT AND HIGH LOAD FACTOR CUSTOMER YOU CAN THINK OF IF YOU LOOK AT THIS THIS VERY SIMPLIFIED GRAPH HIGH LOAD FACTOR CUSTOMER WITH THAT LINE OF USAGE WOULD BE CLOSER TO LIKE FLAT THEN SORT OF GOING UP AND DOWN RIGHT AND IT USED TO BE THE CASE THAT THAT WAS SORT OF THE. That was the goal. We wanted to push the utility system to customers to moving the entire utility system to be very high load factor because if it was flat, when we had dispatchable, when we were a little less concerned about environmental impacts and we were running a lot more coal, you know, if you can just turn a coal plant on and run it flat out, that's a lot more efficient than ramping things up and down. So that used to be what we wanted was a really high load factor, everyone being really high load factor customers. But with the growth of more variable resources like renewables, wind, and solar, and things like that, they're great. They're no fuel costs. They're non-emitting, all those types of things. But managing the grid is a different type of challenge with those on the system versus stuff you can literally turn on and off and ramp up and down. And then the scale, I gave you the Alliant Energy example, but another good one that I like to use, and I use this one, I mentioned this one to the state legislature when I testified before them, is the two projects that we know are going in, which is the Microsoft project in Kenosha and the Lighthouse project in Port Washington. If their usage meets up to what they say it's going to be, it will literally double the size of WE Energies from an electric consumption standpoint. So again, it took about 100 years to get to 5.3 gigawatts, and over the course of five, six years, we're gonna double that, right? So it's scale, pace, some of the dynamics of how you manage the system with these types of customers on the grid, and that sort of drive the issues that we have to manage. So the biggest concern typically when people are talking about data centers or large loads in MySpace is risk, right? So, as I mentioned, and I'm sure you folks are aware, you've talked about data centers typically come, these hyperscale data centers typically come with a need for the utility to invest in significant additional generation, transmission, maybe distribution, maybe other costs like administrative costs. costs and things like that um in order to serve them um they have to if the if that customer needs service they have to make those investments and they have to kind of make it in a reasonable um on a reasonable timeline right there is a little bit of a degree to which utility can say well i know you want You want speed to market, you want this now. I can't give it to you now, but I can give it to you, maybe not 2026, but I can give you everything you want in 2028. But you can't say, well... It would be more convenient if it was like 2030 or like 2032, right? So there's a balancing act of how the utility has to meet its obligation to serve and how it makes these new investments. But the trick is, because of that scale that I was talking about in terms of how big they are, we are... functionally going to have to basically double in the case of we energies they're basically going to have to double the size of the generation fleet they're going to have to atc is going to have to build a lot more transmission for a large hyperscale project in the dane county area uh alliant would likely have to make incremental generation investments new power plants whether it's solar whether it's gas who knows all right but that's a lot of dollars and they're all tied up in these individual customers And so the risk comes in in that you've got a lot of dollars that need to be paid for. You're essentially buying another house, and you've got to make a mortgage payment on that. And your neighbor is saying, I'm going to make that mortgage payment for you. But if they decide to skip town, then you're on the hook. So there's uncertainty about the development timelines, how quickly they will actually be able to ramp their load up. Because if you're going to build it all, you want them to start paying as soon as possible. So you want their load to go up as quick as possible. there's uh all but there's also concerns in term in the risk department about whether or not that usage will actually you know actually show up right if someone says um if i use the house analogy right it's like you know um uh i'm gonna you someone says i'm i'm you i need you to build me a 12 unit commercial um building um i got i got 12 12 people lined up to lease that right right you go out and you build it But at the end of the day, only three people come out and lease space. But you still, as the developer, still have to pay for the whole building, right? So if that load, the data center load never shows up, then again, that's another source of risk. And these can affect the rates for the customers. It can affect the planning and the changes to resource planning can also affect reliability and things like that. And the risk potentially falls on other customers or also the shareholders. The regulators in this case do have a duty to make certain the utilities are financially healthy so they can continue to provide utility service. I personally understand where the feeling goes of like, well, if the utilities make this bet on supporting data center development and the data centers aren't good for it, screw the shareholders, right? I understand that sentiment, but at the end of the day, if that makes it so that the data centers, sorry, that the utilities can't obtain the capital they need to invest in the system, that hurts everyone else too. So there is this, again, this balancing act that I had talked about before. A few, the big ones that you've probably seen in the press are, you know, all this additional investment puts upward pressure on rates just in nominal terms, okay? And As it typically is in the history of the universe, things get more expensive as time goes on. Inflation, things like that. But also because this development boom is not just happening in Wisconsin, but across the country, cost for components across the board, combustion turbines, even the steel and conductors for, you know, poles and wires, things like that. Everything is getting more expensive, right? And so the average cost that the utility needs to invest in to support the data centers is higher than the average cost that they have made historical investments in to support everyone else up to this point. So not only just in general terms you're having to spend more, what you're having to spend more on is more expensive per unit. And so one, the dollars are just going up, but then stepping back into sort of minority utility regulation universe, a lot of what we end up having fights about in front of the regulator is about how to split essentially the pie, how to split the check of the total cost to serve all the utility customers. And if you do it right, then everyone kind of pays for what it costs to deliver utility service. If you don't quite get it right, then maybe, You pay for some of the costs to serve the business down the street or something like that. You have cost shifts where the cost causer isn't paying for all of the costs that they have caused the utility to incur. Hopefully that tracked. And when we're talking about, for example, I like to use WeEnergies because it's an extreme case. If you're talking about doubling the size of the utility functionally, The margin of error on getting that, on addressing any cost shifts and making certain that the people who cause the cost pay for it, in this case, the data centers for those incremental costs, the margin of error is very small, right? Because you're talking dollars in the billions, literally. So you can get cost shifts to other customers or to the utility, right? Because if the utility is unable to recover its costs in between opportunities to adjust its rates, then the shareholder eats it. Or if it happens to be a municipal utility, then the municipality eats it, right? So both customers and the utilities are at risk a little bit of cost shifts. You can have under recovery. Like I mentioned, the load may not show up. So essentially, your denominator, when you set rates, assumes a certain amount of usage. But if that doesn't show up, then other folks have to pick up the slack. But like I mentioned, also, you can have under-recovery if you just don't design the rates right. And then the other one that gets a lot of press is the stranded asset concern. Again, stranded assets could come in the form of just underutilization, right? We built 100 of something, and the utility only ended up paying – needing 50 and the rates are only set to charge them for 50. So all this stuff is stranded and the other customers don't need it, but they have to pay for it. But the big one is the concern about, well, what happens if there's a large project for I'm not gonna call any one particular company on the carpet for data center company A and they look great today, but in 10, 15 years, either they no longer need the facility or they go bankrupt or are insolvent and they just basically leave town functionally or just no longer a customer anymore. All of the costs, all of the things the utilities invested in to support them, to make it so they could take service have typically 30 to 50 year lives. So it takes that long. So you can think of it like your house, your mortgage, right? It's like a 30-year mortgage. And if you just quit your job halfway through and no longer have income to pay your mortgage, mortgages still do, but you don't have any way to pay it. So it's the same idea. If the data center were to leave for any reason, midway through paying off all those investments and the question is who pays for that okay um one thing to think about that you may see uh you know data center developers talk about and also utilities is that oh if we come to town that'll help put downward pressure on rates for everybody right there's a benefit to existing customers and mathematically that can be true right um Essentially, it comes down to, and I have this diagram here of sort of a spectrum, right? This claimed benefit can only happen if two things happen, is conditional upon two things. The utility, through the rates they pay to the utility, has to cover all of the incremental costs that occurred, the sort of, but for the data center, the cost wouldn't exist. They have to pay all those incremental costs, pay for all those, and they also have to pay enough in their rates to contribute to other fixed costs. That's where the downward pressure for other customers comes in. Because the utility has a lot of other fixed costs, poles and wires, their headquarters building, their billing centers, their trucks, all that kind of stuff, all those fixed costs. And more, essentially, more units, more sales to spread those fixed costs out over can put downward pressure on rates for everyone else. But there's some ifs, right? and essentially the possible solutions to how you treat utilities from a regulatory perspective exists on a spectrum. You can approach it where, OK, well, we want to maximize the opportunity for all this new load to help kick in for existing fixed costs, try to help benefit existing customers as much as possible. That looks more like we're going to treat them kind of like every other customer we've ever had in the utility system ever. They go into the pool. We kind of spread the costs around. We do it on an average basis. and there's an opportunity for them to kick in for other costs. It's not quite that simple, but conceptually that's the idea. On the other end of the spectrum is, in the extreme version, is we've seen, I'm not remembering the utility off the top of my head, but one model that's emerged is for public utilities to essentially create A sub-utility, like an affiliate that's more or less a standalone operating company that only serves the data centers, right? And so is completely firewalled off and is more or less a distinctly separate financial entity from the legacy public utility, right? That's the most extreme version. But essentially what you're doing is you're creating, think of it like a firewall, right? No money and booze back and forth. So on that end, you don't really have the opportunity for the data center to help put pressure down on rates, but you've mitigated much, if not all, the risk. I won't say all definitively, but you mitigated much more of the risk. So it kind of depends, no matter policy, where on the spectrum you want to land. But I want to address that because that's something that you might hear. We've got a couple more things to hit here related to things I've talked about. So on all these issues of potential rate impacts to customers, managing sort of stranded asset risk, managing financial risk, things of that nature, we have some experience in Wisconsin that mirrors some of the experience around the country. We do have the benefit of not having been trailblazers in this department, so we've been able to kind of look at what other states and utilities have done. All right, and we've dealt with proposals from Alliant and WeEnergies. I'm sure most all of you are at least tangentially familiar with both of them, if not intimately familiar with both of them, particularly the Alliant Metadata Center contract, right? And the big issues that we've had to grapple with from a utility regulation standpoint and mitigating impacts to customers really comes down to that cost shift mitigation.

All right.

So it comes in the forms of minimum billing amounts, right? So without getting into the weeds, big, large customers, most of us as residential customers, our utility bill comes in two parts. There's a fixed cost amount. It's like customer charge. It's the same every month. generally the same every month, and then we pay for the amount of energy we use. The price may vary depending on when we use it, but two pieces, a customer charge and energy charge. Large customers, that's broken out into other components. One of them is demand, essentially. How big is the pipe? How much is the maximum amount of energy you're using at any one point in time? And a lot of the fixed costs are typically recovered through those for utilities. And so one of the things that our commission has approved or at least required in the contract is a certain amount of minimum billing demands to make certain that there is some reasonably compensatory contribution to fixed costs like transmission costs as well as generation costs. There's more extreme versions of that, which I'm lumping into sort of the take or pay. category. The best example I can think of of that is WeEnergy's bespoke resource sort of idea, where if you're any large load above 100 megawatts, that you have to subscribe to bespoke resources in an amount sufficient to serve all of your electricity usage, right? So it's kind of like that mini standalone sub-utility I was talking about, but it's through sort of a subscription model. And through that, the reason it's sort of it's take or pay is whatever the utility has to build into spoke resources under WeEnergy's proved rate. those customers are on the hook to essentially pay off that mortgage for the full 20, 30, 40 years, whatever the case is. So if they terminate early, if they terminate service before it's paid off, they are still financially obligated, contractually obligated to pay for all of the steel in the ground that was invested in. um there's an incremental cost test element of again that sort of but for like but for the utility what would the cost look like and now with sorry but for the data center what would the utilities costs have looked like and then now that we have the data center what do they look like what's that delta and um you know our commission imposed that requirement for alliant energy and there's some uh a proposal by excel energy that brings something similar One that also is probably potentially of interest in terms of local policy and in terms of the impacts on communities is a requirement that these data centers pay 100% of the required focus on energy contributions or the amount that the utility actually has to pay and focus on energy contributions. uh through their rates and the reason i say the amount the utility is required to pay is because that's how the statute is written is the utility is required to contribute to focus on energy 1.2 percent of their revenues it doesn't say that every customer has to kick in 1.2 percent and in current statute there is a provision that allows large energy customers to have their the amount that they pay through rates to focus on energy capped at a much lower amount Functionally, what that would do, if these data centers would be allowed to take advantage of that exemption, that cap is, because the utility still has to kick in the same amount, that cost burden would be shifted to other customers. So the PSE has recognized that and has included that in their orders up to this point, making it so that the data centers are obligated to pay that. There's some financial risk issues to think about, which also might be something to think about in terms of sort of local and municipal impacts. There's risks of, for the utility, even just slow pay, right? If you've got a customer that's one-third of your business and they're like one month late on their bill, that's hundreds of millions of dollars, right? And you've got expenses to pay. So slow nonpayment of bills. Again, I talked about the concern about customer insolvency or bankruptcy, right? And the idea is that we want to protect other customers and the utility shareholders, or in the case of the municipality, from bearing those risks. So things like termination charges have been imposed, typically in the form of some number of amounts of service that they would have been billed, like 24 months or 36 months or 48 months. There's typically a requirement for some sort of financial security. The form is either in cash or collateral or in a letter of credit or a parent guarantee, or there is... Generally speaking, if you look across the country and in Wisconsin, if a customer has a high enough credit rating, then they don't have to put up any kind of security. A good example is Microsoft. They are a triple-rated company, and so for their service, they don't have to put up any letter of credit. But for a company like Oracle, for example, that was BBB and is now BBB-, they have to put up the full amount of security for the energies in the form of a letter of credit. And then one thing to think about, again, when thinking about maybe local policy is what the impacts of that might be on data center development. I don't have a dog in this fight, but just something to think about. One of the things that was made very clear to us in the utility space is if you do certain things and you make it harder for the data centers to develop in your area, right, it might be perceived as you sending the signal that, you know, you're closed for business to that type of development, right? The WeEnergy's financial security requirements, for example, that one, there's an ability for the customer to not have to post security if they are AAA minus or higher in credit rating. Oracle is not AAA minus or higher. Like I said, they're BBB minus now. And that's why they sued the commission, because they have to put up letter of security. And all we heard after the commission made that decision was, oh, well, There's the commission is now saying that Wisconsin has closed the business to data center development, right? So something to think about is that whatever frictions that might be created can be perceived or maybe spawned by folks as sort of like closing the doors to certain types of development. And then the last little bit, I'M GOING TO JUMP TO THIS. SO THE LIMITATIONS OF UTILITY REGULATION, I'VE BEEN HINTING AT THIS A LITTLE BIT, IS THE COMMISSION REALLY IS ONLY CONCERNED, CONCERNED IS NOT THE RIGHT WORD BECAUSE IT MAKES IT SOUND LIKE POTENTIALLY MALICIOUS DEPENDING ON YOUR VIEW. BUT THEIR JOB IS TO ENFORCE THE EXISTING LAWS AND ADMINISTRATIVE CODE. Their job is to balance the interest of utility customers against the utility and its shareholders. The public interest, as I've mentioned, as sort of narrowly defined and being adherent to that sort of just and reasonable standard for rate making and regulatory decisions. Other considerations, environmental impacts, water quality, air, local economic investment, economic development, all those types of things that aren't specifically addressed in law. We have air quality. We have certain environmental regulations. We have a renewable portfolio standard for utilities. Those the Commission has plays a role in some way in enforcing but if it's other things that aren't within sort of the narrowly defined scope of the Commission to enforce. Those are things that have to happen elsewhere right so things like community benefits agreements by municipalities. Local governments to require that data centers or potentially even the utility. you know, makes certain commitments to the communities in the form of support or whatever is desired. And, you know, that's something to think about. Zoning requirements, those are obviously not anywhere close to the commission's jurisdiction. any of those other type of policy considerations, other than kind of what I've been talking about in terms of utility rate regulation. Those you want to think about elsewhere, and you really want to think about them the moment you hear about a project. Because if it's in any way something that intersects with the commission's jurisdiction, you're probably not going to get it by lobbying the commission for it, or asking the commission for it, unless it falls, again, within the narrow set of buckets of things that they can pull levers on. I have a list of sort of resources you can look at, but that's what I got. And I think I took most of the time, most of half of the time. Karen's looking at the clock. But if folks have questions, I'm more than happy to address it.

How do we not? Go ahead, Cynthia.

Is there a role here for MISO, regional planning in data centers or not?

Yeah, so that's the answer to that question is the beginning of a long other story. So MISO in its role, and I will be 100% frank, Karen actually knows way more about MISO than I do. The role for MISO generally right now is in the transmission area, the transmission costs. So a good example, you know, there's two challenges with transmission. One is... When you build a transmission project, those go into, let's focus on ATC. Those go into ATC's rates, and they go into the pot, and they get sort of spread out on an average cost basis. And if you just did it, if that was paid for by the utilities the way we've always done it, data center cost the transmission cost for data center in utility a may not all flow to utility a they may be paid for by customers of utility b okay that's the first order issue and then once you get the costs to the utility then you have to flow it through through retail rates which is the state commission jurisdiction so miso right now um firq issued a show cause order to um pgm and miso to basically justify their large load allocation methodologies, that's in progress. MISO has a large load working group, and my understanding is they are going to start taking up cost allocation opportunities I've heard Q4 of this year and seeing if there are reforms there at the sort of regional market level in terms of how transmission costs are recovered. So there is certainly a role for MISO to play. There is also a role for our transmission companies in the state to play in them doing the right thing. But unfortunately, our state commission can't do anything about that. That's a federal jurisdictional issue. But like I said, there's a whole lot of other stuff going on. I think I just had a conversation with someone yesterday, and they brought to my attention six FERC dockets that are going to be opened in the next probably four weeks related just to WeEnergies and their data center projects on transmission.

Anyone else? Go ahead. The mayor's got a question.

Corey, thank you very much for that presentation. It was really informative, but I'm still struggling with something.

Yes.

So how is it if WE Energies has to double their transmission or generation in two to three years? and could potentially be left holding the bag if one of the data centers skips town? How can that be considered just and reasonable? And then also, where does the concept of equity come in? Especially if a lot, I know that you mentioned public interest, but I kept waiting to hear the word equity, which I didn't hear. So how is that factored in, particularly when you look at rate payers potentially being left holding the bag? And then the other thing that I'll ask is, I really don't understand why these deals aren't structured in such a way to account for risk. Because if I'm having to double my capacity or my generation, I would want to be assured that my main customer is going to pay me. So I'm just, yeah, I'm struggling with those.

I'll try to take, I'm not going to take those in the exact order you brought them up. But so the issue of... If you're first and last question, it sort of relates to how things are structured to address risk and recovery and things like that. And so that's where, you know, in Dane County, we saw Alliant Energy come forward with an individual sort of one-off contract with Meta, right? This is sort of a one-off ad hoc deal. In utility regulation, we don't normally do that. In general terms, we typically abhor these sort of like special contracts. We tend to do things through the utility's tariff, through its rate book, through posted rates, through things where a company can walk, you know, they can look into Wisconsin and say, if I want to locate in Dane County or if I want to locate near Green Bay or in northwest Wisconsin, who's the utility? What are their rates? What can I expect? What are going to be my financial commitments and obligations? All those types of things, right? So you'll hear and you'll see in all the stories and And Kieran and I were talking about it. Wisconsin Watch has done a really good job of covering the data center issues in more depth than I've seen in the past. You'll see mentions of tariff, tariffs, tariff rates. And that's where how those things are structured becomes important. And those tariffs, as well as the META contract, include things like contract lengths. So the contract for META is a 15-year initial contract. So they are on the hook to pay. Well, they have a contractual commitment to make certain payments to Alliant Energy for a minimum of an initial 15 years. Okay. WeEnergies, theirs is different. They have got approval for a change to their rate book, their schedule of rates, their charges, right, their tariffs. So they have a tariff now for two tariffs, actually, that are related for data centers. And those also include terms like a minimum contract length, initial contract length of 15 years. It includes that bespoke resource obligation I was talking about where we, in case of WeEnergies, and all the utilities are proposing slightly different solutions to this. So in the case of WE Energies, the data center subscribes to a certain amount of resources, right? The utility goes out and purchases them, builds them to support that customer. But that customer is contractually legally obligated to pay for those capital investments, the actual like physical infrastructure. the full depreciable life of that. Now, there is an interesting trivia question, I guess, or a conversational question about if a utility had, for example, $3 billion in liabilities associated with, or investments that they made associated with a large load customer, and there's a contract that the large load customer has to pay for all of that, and then they go bankrupt, What's the enforceability of that? That's sort of a different problem. It's a real problem, but it's one that unfortunately will probably just have to be tested in courts if anybody ever gets there. Hopefully no one has to deal with that. So the risk and recovery issue really comes down to what those contracts or rates approved by the commission look like and how much they hold the data center to certain payment obligations. And I will say that we've done a pretty good job in Wisconsin. So the up and down side is that by the time we probably get to this time next year, how those costs will be recovered from large, low data center customers for all of our investor-owned utilities will probably be settled. Because we have, WE Energies has an approved rate. Xcel Energy has come in with a rate. MG&E came in, has requested approval of a structure very much like WeEnergy, what WeEnergy's got approved. In fact, it's almost a carbon copy. We expect Alliant Energy to come in by the end of this month with their proposal. And so probably by about this time next year, there will be rates in effect for data centers. So if any municipalities are having interests in that, then over the next probably nine months is when to keep an eye on that. But that really comes down to the contracts and the rates. And then the equity part, I'm glad you asked. The utility commission's role in equity issues is again very much dependent upon the interpretation of a commission and the commissioners as to what their duty is. Some people feel that some of the ways we would address equity on the regulatory side constitute undue discrimination in the sense that Maybe we're providing additional financial assistance to folks who have difficulty paying their bills that maybe I don't need, but my neighbor needs, right? But we're similar customers. We live maybe in the same neighborhood, and we have similar-sized houses, and we have similar-sized electrical loads. And there's this notion of undue discrimination in the utility regulatory space. And depending on the policies in the state... in effect, as well as the commissioner's interpretation of their duty and their authority, that gets tricky. That's a fight that we fight every year. But that's sort of, it's related to, but is a little separate from the data centers. But to the extent, for example, and I've heard of community benefits agreements where with data centers, where the data centers have made, like Meta, right? They made a commitment to certain, you know, community investments in low income and things like that, right? So that doesn't affect the utility bills directly, but it can provide a support on the equity side of things. So if you're thinking about data centers, maybe looking, okay, what levers can I maybe help or suggest to the regulator to pull within their space, what can address equity, but there may be things outside of that that you can focus on.

Thank you.

Anyone else has questions?

Go ahead. I'm wondering what goes into... the system planning for electric utilities. So to use the substation that's in the town of Vienna near where QTS was proposing their site to be, how do they select that site and then what approvals does the utility need in order to get that built?

So the transmission planning happens, I'll call it predominantly at MISO. Something like that would normally, you know, substations and transmission investments that are more local in scope would fall under the Mid-Continent Independent System Operators, MTEP process. Do you remember what that acronym stands for, Karen?

Nope.

I think it's MISO Transmission Expansion Plan. Yeah, Transmission Expansion Plan. And it is, within there are those types of substations and local investments and that type of thing. There's a big appendix A, I think. There's like hundreds of projects. So those are, what happens is the process, and if you'd like, I can go find, there was a presentation that I just saw from LBNL that had some nice diagrams for this. But the process is essentially the customer goes to their local utility with their requirements. the local utility goes to their transmission operator and says, this is what we need from a transmission perspective to support bringing electrons to the customer. The transmission provider, let's say in this case ATC, they then do a study. And they would identify, for example, that there needed to be a substation upgrade. And then they, in our MISO universe, they would then submit that to the MTAP process for approval by the MISO board through the MTAP process, which is functionally an annual thing. Um, so on the transmission side that happens at MISO and it mostly is a customer talks to the utility, utility talks to the TO, TO talks to MISO, right? And then the approval flows down and then that gets built. For things like generation, that's planned for by our distribution utilities because our utilities are vertically integrated for generation and distribution, at least our big utilities. And there, something that Karen and I have actually been working on on the side as a side project is we don't really have a structured process for that. It's a similar... you know, sort of chain of events, the customer comes to the utility, the utility says, okay, well, in order to support a gigawatt of load, This is what I have in terms of a portfolio of generation. What more do I need? They model that through some very sophisticated resource planning modeling, and then they figure out what they need to build. And then they bring applications for that back to our state commission. But there's no requirement that they go through that planning process in a way that is sort of open, transparent, holistic, that really allows the commission staff and stakeholders and the commission to think about the entire portfolio of resources the utility has and what's the most efficient investment pathway for everybody. So there is a procedural, there's a process deficiency that we have in Wisconsin that a lot of other states don't. So we do have a disadvantage there.

When communities, municipalities, cities, villages, towns are doing their future land use planning, is that considered by the utilities when they're siting infrastructure?

So there is an environmental component to construction, power plants, solar power, you know, transmission lines, whatever the case might be. So there's usually an environmental assessment or an environmental impact statement depending on the scope of the project. Scale, I would say really the scale and to a certain extent the scope of the project. And IT SHOULD BE THE CASE THAT THOSE CONCERNS AND CONSIDERATIONS IT SHOULD BE THE CASE THAT THOSE CONCERNS AND CONSIDERATIONS ARE EVALUATED THROUGH THAT THOSE CONCERNS AND CONSIDERATIONS ARE EVALUATED THROUGH THAT ENVIRONMENTAL ASSESSMENT OR ARE EVALUATED THROUGH THAT ENVIRONMENTAL ASSESSMENT OR ENVIRONMENTAL IMPACT STATEMENT ENVIRONMENTAL ASSESSMENT OR ENVIRONMENTAL IMPACT STATEMENT PROCESS AND THE COMMISSION CAN ENVIRONMENTAL IMPACT STATEMENT PROCESS AND THE COMMISSION CAN CONSIDER THOSE TYPES OF PROCESS AND THE COMMISSION CAN CONSIDER THOSE TYPES OF ISSUES WHEN FOR EXAMPLE CONSIDER TH Notice I said supposed to be. I mean, the reason we have regulators is because usually there's some conflict. Conflict of interest usually invokes a different idea, but I think you get what I mean. There's some conflict in the interest of two or more parties, whether it's a town, whether it's the customers, the shareholders, the data center, whoever. And there isn't a clear... obvious answer. That's why we have regulators. And so they will take that into consideration, just like they'll take the consideration of an affected landowner if a transmission line is running across their farmland, right? But how do the commissioners balance that is up to the moment.

And for generation larger than 100 megawatts, the siting authority is at the state, not the local. So there's legal constraints of what municipalities can even have in their zoning laws.

Anybody online has a question, you need to let me know in the chat. It's the only way I'll be able to, I can't see raised hands, so. Anyone else? Questions? Go ahead, Cynthia.

Sorry. There's been a lack of transparency in these data center proposals and a lot's happening behind the scenes and non-disclosure agreements and then redactions at the Public Service Commission when we do release things. Do you have any tips on how to increase transparency so that the public can actually find out as early as possible about this possibility?

Yeah, so on the utility regulatory side, what I feel fairly comfortable saying is that our commission took a very dim view of the amount of confidential treatment requests that came before them in these two cases that we just dealt with. And part of the benefit of having tariffs as opposed to individual contracts is it is very transparent. It's like a posted rate. It's like a menu, right? You can kind of see the public can inspect that. You know, you can look at it. It's very dry. But you can see what the terms and conditions of the rates for the data centers are, what the conditions are, all those things. So there's transparency on that end. Now, if we're talking about the type of transparency that we've been – that some folks have been struggling with in the state where it comes to, like, members of local boards or whatever entering into NDAs with data center developers. That's different. On the regulatory side, at least our commission has moved in the direction of as much sunlight as possible, and by requiring standard offer tariffs for basically all the utilities, at least on that side, like I said, will look pretty good.

Thank you.

Anyone else? A couple quick ones. First of all, to Caitlin's question, it brought up a process that leads up to MISO. Is that how you say it? MISO? I see it. I see MISO.

I do too.

But that's not a public entity, right? I mean, there's... I mean, that process isn't a public process.

No, it is subject to a stakeholder process that is sort of blessed by the Federal Energy Regulatory Commission. It is not public in the sense that just any member of the public or even just any particular local or city government could just jump in, like on a whim. There are stakeholder groups, for example, consumer advocates. We have a consumer advocate stakeholder sector. There is a, what is it, a clean energy sector?

Environmental sector.

Environmental sector. The large industrial customers have their sort of qualified end-use sector. There's the transmission-dependent utilities, transmission operators, that kind of thing. So what happens is there's that sort of stakeholder process that is advisory to the MISO board in their decision-making. And there is a place for, for example, I was just looking at a voting list for MISO yesterday for some weird reason. And there are cities, there are municipalities that are stakeholders. But you have to go through the process of becoming a stakeholder if you want voting rights. Now, the trick, though, as I will say, is then you get placed in your particular stakeholder sector, and so you vote within your sector of what's our sector's position on a particular issue or policy or MTEP plan or whatever the case might be, and then you get a sector vote, and that's one sector vote amongst many sector votes, and so the voice of any one entity can tend to be very diluted.

I'm just going to add in, there are some places where individual organizations have votes more on like leadership of some of these stakeholder meetings. A resource I would recommend is the Great Plains Institute hosts the MISO cities and communities group and are trying to disseminate information around MISO to local governments. Bridget Williams is really fantastic resource. She's based in Milwaukee. Great Plains Institute is a nonprofit that mostly does convening spaces. Many, many MISO meetings are just open to the public. So even if you're not an official stakeholder member, you can call in and watch meetings. They can be very dry, six-hour long meetings. So there's like a barrier to participate just from that alone. But there are, they do have, host their presentations online. So you can see what bottom-up projects ATC is bringing to MISO through this MTEP process. some months before it's approved. So it could, I can try to direct you to where that might be the most, like a place to kind of keep an eye out on.

Okay. Seems like an area where we need more transparency in public. Kathy?

I would just add to that that we, the Office of Energy and Climate Change is active in MISO CCC, the local government group. So we are at those meetings regularly. They're quarterly now. But, yeah, we've been involved in that for a couple of years now. Okay. So we can share. And it is a great resource on data centers.

Depending on the desired level of participation, it can be a fairly hefty investment in time and resources. Some of my peers, peer offices in other states, consumer advocate offices, they have – two or three people who their entire job is just following regional market issues. Now, if you're only concerned, again, for example, about local reliability or local transmission project investments, and it's very targeted, and you're looking at specific things that are going to be added to like the MTEP and things like that, it could be narrower in scope. But like, Kieran's not lying. Some of the meetings are six hours long. So, and there are a lot of them.

Another quick question. You mentioned for those things that fall outside of the scope of what the PSC can consider, some of the environmental concerns perhaps around emissions and whatnot, you mentioned that community benefit agreements can be one tool to address, to take those other areas of concern into consideration. consideration for a community. But the thing I'm struggling with that idea in this context is that those potential, like, well, just taking environmental concerns, for example, as a regional concern, I mean, a power plant might be a county away. I mean, Columbia County power plant, for example, relative to what was proposed in Vienna. So how would CBA address something like that? Is that just a limitation we have to accept? Yeah.

I am not a corporate negotiator. The thing I will throw out is if you have a company, like a larger data center developer, like a hyperscaler, like a Microsoft or a Google or a Meta or an Amazon or those types of companies, they may eventually have more than one project in the state. Or they may have regional projects. they may have projects elsewhere in the region. And what I'll say is you can't get something unless you ask for it. And so those agreements might extend beyond the initial, like a community. It could be commitments to, you know, to the extent that they have an influence on it, try to pursue only renewable generation to support their utility service in, your community or in the state or whatever the case might be. I don't know what anyone might be able to get from any one entity. I'm the wrong person to ask about, like, what you could get from, like, Google, for example. But you're right. You know, AIR doesn't respect utility service territory boundaries. But every little bit helps. And so particularly if there is more of a statewide sort of emphasis on ensuring, like for example, if there was a concern about what type of generation infrastructure would be brought online to support data center loads, if there was an effort to try to put pressure on data centers as a condition of um permitting to build a project to say that they will associated with this project pursue to the degree practicable or whatever renewable resources to power that project that could then flow to up to the utility, when they work with the utility, some of these agreements, some of these structures, what we haven't quite figured out is the degree to which the customer has influence on the resource planning by the utility on the type of resources that the utility will invest in. Because these companies have corporate commitments for clean energy, environment, things like that. But they're also grappling with speed to market. So if you, they wanna still meet their corporate goals of zero carbon or whatever the case might be, but they wanna get as fast as possible. But if you as a municipality can maybe push, put more weight on the corporate responsibility side through some sort of commitment, then you might get there. It's an idea. And the trick is, because we are still a little bit in the early days of this, it is really a matter of what are your priorities? What do you want? Ask. Try to negotiate for it, because if you don't ask, you're not going to get it. But at the same time, you know, I guess be realistic.

Can I just follow up on your question?

Okay, quick.

I'm just curious, are you familiar with the Wisconsin Water Quality Trading Clearinghouse?

I am not.

So it's quite unique globally. Wisconsin is the only state in the country that has anything like this. It's basically a marketplace for facilitating water quality trading. But one of the things that I've heard is that they're very interested in potentially working with data centers to address in part this issue of regionality. so that they can find a way to fund water quality investments, particularly in farming, around watersheds throughout the state, which I think is really quite interesting. But when I heard that, I was trying to figure out, well, how would you actually go about doing that? Because the data centers are located in various jurisdictions, and what they're looking at is some measure of connectivity for the watersheds throughout the state.

so i don't know if you have any perspective on that i i don't i'm not familiar with that um the only thing i could i can really add substantively is that um amounts of money that we might think are ludicrous are nothing to these companies i know so you know commitments to make investments to those types of programs even if it's not like a local program but if it if it does have impacts on your your your community it could be a thing to think about

right well thank you i'm cognizant of the time and we want to give uh karen a fair amount of time already asked one but i i i have other questions and i'm just thinking that there might be either some follow-up conversations between staff and you and myself hopefully or and or we schedule another um time with you, with the committee, because I'd like to take a deeper dive into sort of those areas where, you know, you mentioned, for example, you know, an extreme way of addressing risk would be having a sub-utility in a sense for, but what are the tools that the PSC has that address those risks short of having a sub-utility? Or were there the gaps that maybe this body, one of our deliverables will likely be advocacy for certain policy changes at the state level? So what are maybe some of those things that we can be advocates for to better equip the PSC?

Yeah, I'm happy to come back as time permits. And yeah, we can nerd out about this for hours. So my hope was that you would have now a set of questions and we can build from that.

Thanks. All right. Thank you. Karen, go ahead.

I feel like there is a really good transition from Corey's talk starting to get at the the regional questions about air pollution and those impacts. So that's what I'm going to talk to you today. We had such a fantastic session on water last month that even presented some of Clean Wisconsin's indirect water use analysis. So my specialty is in energy the electricity grid and air pollution. So that's really what I'm gonna focus on today. So Clean Wisconsin is a nonprofit, nonpartisan statewide advocacy organization. We've been around since 1970. Our mission is to combat climate change and pollution in our air, water, our land, and to ensure a healthy future for every Wisconsin community. We have staff scientists on our staff. We have policy experts. We have lawyers. We have communications experts. So we do a whole bunch of work on interpreting relevant science, representing the public interest in these PSE cases, and communicating both the analysis we do in-house and also other research done by other organizations. So first I want to talk about climate change. We are already seeing the effects on our Wisconsin landscape. We are finding our environment to be warmer and wetter and more extreme. We are seeing drought conditions impacting farmers, but also more frequent and extreme flooding events. Even this past spring's hail event that brought considerable damage to the county has connections to climate change. And then there's the expanding tornado zones, recent winters affecting tourism and the outdoor recreation. And then just to really focus in, one of the most pressing and emerging climate impacts is the impact to our summer air quality from these Canadian wildfire smokes. They're really affecting our ability to be able exercise and work and safely be outside in the summer. I just saw some recent research with a really astounding conclusion that the cost of climate worsened wildfire smoke was not considered in the climate impacts of previous research. And that alone is larger than every other impact combined. So this air pollution impact to our public health is truly extraordinary. also feels too relevant right here this summer. So the electricity sector is the largest source of greenhouse gas emissions in Wisconsin. Of course, transportation and our buildings and our agriculture are also large sources, but electricity is the largest. And that's due to the fact that most of our electricity is generated by fossil fuels, methane, natural gas, and coal. We've seen its shift and expand a little bit to have more solar and wind generation. But with these data centers, the state is projecting a 40% load growth rate. This is just, and 70% of that load growth is just due to three data center developments. So this is incorporating that doubling of WE Energy's territory, and it is doing so in just a few years. Across the United States, electricity is forecasted to increase by 32%. by 2030, mostly driven by data centers. Another research, Lawrence Berkeley Lab, said that they're expected to consume as much as 500 or 580 terawatt hours of electricity in 2028. which is not, terawatt hours is not really a metric we use much, but that would be 580,000 gigawatt hours. So it's about 50% of all of U.S. industrial electricity use from a couple of years ago. So to kind of zoom in on some of the most certain approved data centers in Wisconsin, we have the Mount Pleasant Microsoft coming in in a couple of different phases. Second phase, I have not been able to find a public source of that size. The Port Washington one is astoundingly large, 1.3 gigawatts to ramp up to 3 gigawatts. And then there's the Beaver Dam Meta 220 megawatts. This is all leading to six gigawatts more of fossil fuel power. Just as some context, Point Beach nuclear plant is 1.2 gigawatt size. So we already have two approved gas plants approved last year at the Public Service Commission. There's the Oak Creek gas plant and the Paris rice units, which peaking units. There's three additional proposed new gas plants. The Red Oak Ridge and the Foundry Ridge ones are in process at the Public Service Commission, so those are open dockets. The Forest Junction gas plant, they haven't submitted an application yet, but... We believe that will come soon. Those three are being proposed by outside developers and not the utility themselves, whereas the Paris and Oak Creek were proposed by WE Energies themselves. But WE Energies has those new, the three new gas plants are slated to serve WE Energies. And then we also have seen some delayed coal plant retirements because of some gaps in Wisconsin's regulatory landscape. Utilities don't have to actually commit to the retirement dates that they publicly announced every few months, but can shift it back and that we've seen that happen a number of times these last few years. And so these are the three coal plants that retirements have been delayed. The Oak Creek one is being delayed to then convert it to the gas plant that got approved. So Yep, that's just a truly staggering amount of new fossil fuel generation. And all of these investments are going to lock in carbon emissions and harmful air pollution emissions for decades to come. And then as Corey mentioned, there is the possibility of stranded assets. While these contracts may be for 15 years and maybe on the books, they are... like the 30-year mortgage, but most fossil plants this size are run closer to 60 years. And so after 30, are these plants going to close and how will that cost all of us at that time? So to zoom in on the air pollution and carbon emissions impact, first I'll talk about the contribution to climate change. Gas power plants do emit less carbon dioxide at the stack than burning coal. However, the gas is methane, which in of itself is a very potent greenhouse gas. And there is leakage that happens during the extraction and the transport of that fuel to the gas plant. The quantity of that is pretty unknown. And there are massive ranges that's But some studies suggest that taking into account the fact that methane is more potent, especially in the first 20 years than carbon dioxide and all these methane leaks, that it kind of comes out in the wash in terms of its contribution to climate change. And then gas and coal, they both still admit these harmful air pollutants that do not respond to utilitarian territories, county jurisdiction boundaries, state boundaries, but do have more of an impact on more nearby communities. Some of the air pollutants that we are most concerned about are particulate matter or soot or fine particulate matter. These are the small particulates that are like even smaller than that is a follicle of hair and trying to demonstrate in comparison the size of particulate matter 10 and then even smaller than that is PM 2.5 or fine particulate matter. And it is so small that you when you breathe it in, it can get deep embedded into your lungs and even cross into your blood system and affect your cardiovascular system. So PM 2.5 is not just associated with respiratory asthma symptoms, but also strokes and heart attacks and premature mortality. Nitrogen oxides and volatile organic compounds can be cooked up in the atmosphere and form ozone, which is also another air pollutant harmful to public health. A number of counties and partial counties in Wisconsin are non-attainment of federal standards for ozone. So that's a concern, especially along the lakeshore of the state. And it also causes asthma, exacerbation, and respiratory issues. Clean Wisconsin has done some analysis and found that because of these air pollutants, the five new gas plants... actually the two approved and the two pending ones will cause hundreds of asthma cases, ER visits, premature mortality, and just assuming 20-year life of operation, which is conservative, will cause $6 billion in health costs and 430 premature deaths. So this will have a health impact on the state. So gonna go a little bit wonky on the energy grid a little bit. We talked a little bit in the Q&A with Corey's presentation on how electricity is planned. One thing I want to note is that There are really seasonal differences in how much electricity we use. So this graph is showing data from the central U.S. region of which Wisconsin is part of. And it kind of makes sense that our electricity use really goes up in July, representing the summertime. And it really goes up in the middle of the day or middle of the afternoon in July when it's the hottest part of the day. And our electricity or our ACs are as high as they can be. And so the grid is being planned for that peak demand plus some extra just for just extra reliability. So that's what utilities are planning their electricity generation to. But it means that for most hours of the year, there is enough energy to supply new load, including data centers. There's just not enough of this capacity at peak demand to make sure that everyone who can have their AC and the data centers can be running at their max output at that precise moment. But because of this, I there there presents some additional solutions than just building more gas plants and delaying coal power plants retirements. Instead, we can invest more in energy efficiency reduction. reduce the cheapest form of electricity is the electricity you don't have to generate. So let's invest in more programs across the state and reduce that load shape, that peak demand for the whole system by investing in energy efficiency as much as possible. um but then there's also demand response so if you have a smart thermostat on that hottest hour of the day uh are you enrolled in a program that means the utility can adjust your thermostat a couple of degrees warmer so that you're using that much less electricity one one household doesn't make that big of a difference but if everyone is doing it it makes a huge difference And that can be done for residential and commercial. Big industrial plants can be part of demand response. They have a little bit of a different incentives, but they can agree to lower their widgets manufacturing output at that certain time and get special rates in and get money for doing that. So that's something that can really address this peak demand capacity issue. That in paying paired with renewable energy and storage and transmission is also a necessary part to make sure that when you build renewable energy, solar, wind storage, that it can work on the grid altogether and get to where people are needing the electricity. And then finally, how can data center loads themselves be flexible? So not just making everyone else reduce their electricity on that hottest afternoon, but how about data centers do that a little bit? That is something that was, at least especially a year ago, a really hot topic in the energy space. I feel like I've... I haven't seen as many data centers themselves opt into that, but there are ways they can do that. They can, especially if there's, say, a Google data center, They have a sister data center a couple of states over. If our grid is stressed right now, can they shift some of that compute next door? Can they just reduce their operations? Can they schedule certain things to happen earlier in the morning and not in the afternoon? Can they use on-site storage backup to power them through those couple of hours? So that's something that Clean Wisconsin is interested in figuring out ways to incentivize and push for more so that it's more onerous on the data center to be a better grid citizen. Yes. And then one other thing I want to mention about the grid is data centers can also cause some reliability issues on the grid, especially these computational AI training data centers can have really massive swings in electricity demand, which can affect like the... like the physics of the electricity on the grid. And so that's something that is happening at MISO, is happening at the federal regulator FERC, is happening at the North American Reliability Corporation. And so figuring out the requirements for data centers to make sure that if they have this massive swing in output, that that doesn't affect the electricity grid. And unfortunately, just a few weeks ago, such an instance occurred in PJM. About three gigawatts went offline quite suddenly, causing some voltage disturbance, which is just like... kind of like the physics of the electricity. And so there were like residents saw flickering lights and weird noises from their refrigerators. And it seemed like the grid operator was able to get it under control, but that could cause cascading blackouts, things like that. So there's like this reliability issue that just wanted to mention. So, utilities and energy regulators, they like to talk about this, the three pillars they have to balance. Sometimes it's described as a three-legged stool, and that is affordability, reliability, and sustainability. And data centers have the possibility to disrupt sustainability. all of these. So that's why there is such close attention on how data centers interact with the energy landscape. So transitioning to less from the grid and more on the onsite air pollution impacts, data centers really want 99.99999% reliability. That is their goal. And so because of that, they have diesel generators. Most of these projects are proposing to have diesel generators as backup power in case, Something happens with the electricity system and they need to be disconnected or we energies goes down for a storm or something. So they have backup power. And these diesel generators are even more dirty and polluting and dangerous than those gas power plants. And they have more of an impact to local air quality, just in terms of the gas power plants stacks are higher, so it can transport those emissions greater distances, whereas these are close to the ground, local, and more affect the local community. These are regulated by the Wisconsin DNR through air permits. There is a public process you can comment on. We recently commented on both Microsoft and the Vantage Port Washington air permits for these backup generators. We requested that these are so polluting that they are not allowed to be used as demand response. We asked that generators be compliant with stronger emission standards and to install, have the company pay for continuous fence line monitoring and make all that data publicly available. The developers did agree to the first one. TO NOT PARTICIPATE IN GRID DEMAND RESPONSE AS A VOLUNTARY MEASURE. SO THAT WAS SOMETHING THAT WE WERE GLAD TO SEE AND WE ARE LOOKING TO SEE HOW WE CAN FURTHER IMPROVE SOME OF THESE AIR PERMITS MOVING FORWARD. Something else that we did for the air permits was we calculated with some air quality models the local health impacts of these. We found most of the harms of this is attributable to increased ozone pollution. That's of concern, especially since these are either in or very close by the ozone non-attainment zones. And so we found that the Vantage Data Center would cause about 100,000 deaths of public health costs in Ozaukee County every year, reaching about a million dollar annual health costs statewide. And the Microsoft would be closer to $300,000 of health harms each year in Racine and $3 million of health harms statewide. One solution that we find is that data centers could instead have battery storage as backup. Battery storage is really great for two to four hours, which is what these diesel generators are really intending to do. So that would be a good solution that is much cleaner in terms of air pollution and climate impacts. So speed to power is the driving goal that these tech companies will tell you that they want. It is all about building their data center as fast as possible and being and they want to be connected to the grid, partially because the grid is so reliable. It is like the grid is really a technology. massive innovation. It functions very well. So they have that preference because that's much more reliable than even just one single power plant. But because of this massive demand, there are these connection delays. So there's these grid interconnection. So MISO has to study it. The utilities have to study it. They have to invest in, build out the transmission system. And these are getting closer to three to seven years in some markets, which is much, much longer than the 18 to 24 months about it takes to build a data center. And the costs of And then there's also these delays and even getting gas turbines. So if data centers want to come online as fast as possible, going with gas is looking like it's not going to be the cheapest or the fastest option anymore. I think large gas turbines are about five years out and smaller turbines 18 to 36 months. This has meant that some data centers have turned to diesel generators for power. The ones that I said were more dirty and polluting and terrible, and that's not just for backup, that's to serve the whole data center. Elon Musk's Colossus data center in Texas is the most notorious example of that. I is something that I think we have to monitor, but I think that Wisconsin's regulatory landscape makes that much less feasible, but something to watch. And then there's also the possibility for something that is behind the meter or BTM or co-located. So behind the meter means that the electricity generation goes straight from the power plant to the data center, that it doesn't connect to the utility. There is no grid connection. Co-located means that they are closer in proximity or right next to each other. Sometimes these are seen as permanent solutions. Sometimes these are seen as temporary while you wait for those seven-year grid infrastructure upgrades. There are some concerns around... cost allocation related to transmission and grid upgrades. And that's something that MISO and FERC and the show cause order that Corey mentioned are really working on right now. And then also some other recent news that is quite concerning is that the EPA recently announced that They interpret certain federal pollution laws in the Clean Air Act to not apply to power sources providing electricity only to data centers and not to the public grid. They specifically named the Clean Air Act acid rain program, which was really important to reducing smog and PM 2.5 pollution. So this is something that Clean Wisconsin is really gonna take an eye, take a close eye on and seeing if and how that would affect any data centers in Wisconsin. We think this is incredibly concerning. We think it's not terribly surprising given the federal government and some tech companies and utility companies are really putting the health of Americans from both climate change and air pollution at risk to build data centers as fast as possible. So Clean Wisconsin is going to continue to do research and analysis of data center impacts to Wisconsin's environment and public health. We are working on an environmental health brief on that topic, writing up and disseminating the gas and coal plant health report. analysis. We communicate those findings to the media. We have a podcast where we invite different speakers on all of the issues we talk about, but this is a really big one that we've been working on. We think that state regulation and guardrails are really necessary, so we too will be participating in the next session to try to get more regulations on data centers and ways to incentivize them to do things that are cleaner and healthier for Wisconsin, its landscapes, its people, including like expanding the PSC's public scope of what the public interest charges. We will continue to advocate in the state regulatory process at the PSC, at MISO, at the DNR and air permits. And we will continue to monitor federal policy and law changes. And we do sometimes challenge those decisions through lawsuits. So that is my conclusion. Happy to take any questions.

Thank you. Lisa, you have a question?

Yes, thank you. Can you hear me?

We can.

Okay, good. Great presentation. Really appreciate that. I actually have two questions. And one is, you know, you talked about the different options that would be available, but you didn't mention nuclear power as an option. And that is, of course, what companies are doing in several states, Pennsylvania, Three Mile Island, Reactor No. 1. palisades plant in michigan duane arnold in iowa and i'm just wondering what your thoughts are what clean wisconsin thinks about that idea also are you aware of anybody who is hoping to use small modular reactors instead of restarting an old plant yeah so the we think that

I'm going back to this slide because data, like the speed to power is the main things that data centers are saying. We are seeing this massive load growth that they want to come online in the next few years. And again, to build a new nuclear power plant will take years, like seven, 10, 15 years. So there's just a really massive time scale difference between building a data center and powering it with nuclear. SMRs, theoretically might be able to be faster, but we've also never seen that commercially deployed. We don't know how long the permitting of that will take. So again, there's this timing mismatch.

Can you explain to us SMR?

Yes, small modular nuclear. So instead of building like a really massive one gigawatt nuclear plant. It's something that is much smaller, maybe like 150 megawatts, but you can have a couple of them. And it supposedly is a more efficient way to build it. A lot of the massive cost overruns of building nuclear in the United States in recent years is coming from the fact that each plant is so bespoke and specific and technical and so can companies figure out a way to mass manufacture these modules and then they can be more fastly deployed. So that's the theory of it. If that happens, we will see. So that's one of the reasons why I didn't include that in my presentation because we don't see that as really a near-term feasible solution when we are really facing this low growth from data centers now. In Wisconsin, we're really not seeing the option between gas and nuclear. It's gas and renewables. So that's why I included more of those bad in demand response and load flexibility in the more near-term solutions.

Okay. And then my second question relates to something you sort of broached at the end of your presentation, and that is the scope of the public interest. And I'm wondering, do you have any suggestions for how to frame local concerns in a manner that would fit within that narrow definition? And if not, what are Clean Wisconsin's asks for in connection with defining that public interest?

Yeah, Clean Wisconsin is interested in, so other states have either clean electricity standards or higher renewable energy portfolio standards. Basically, their commissioners are allowed to take into consideration both climate change and air pollution when they make their decisions on the full portfolio um that is some like basically our commission says if it is permittable if the dnr will will give them the permit we we don't even look at the air pollution or climate impacts So bringing together, because so much air pollution and climate impacts come from energy decisions that are really being held at the Public Service Commission, we think that's vital for them to incorporate that. So that's something that we are interested in expanding. Yeah, say that.

Anyone else have a question? Awesome, Kieran. Thank you. Kathy, I want to check in with you real quick, see if you have any thoughts that you think we should pay closer attention to, any questions that you might delve into from your perspective in the Office of Energy and Climate Change.

So the one thing that struck me, like I thought Corey and Kieran did a great job of laying that foundation. There's actually some work right now. I was going to say this to you and Majid afterwards. At the University on Community Benefits Agreements, there are a couple of researchers putting together things. They're planning to do some community workshops later this fall, but I bet we could persuade them to give you a preview of, so they've looked a lot at what those agreements look like other places and some of the challenges. And it's another place where we're probably going to need some change to state statute to make those CBAs a little bit more enforceable. But that seems like a topic that given what people are asking questions about, that might be an appealing thing to dig into and- Yeah, that was the first thing in my head.

Thanks.

I just had one question. I don't know if you've looked into this, but with the amount of power that a data center needs, is it realistic to rely on solar or wind for that amount of energy? And then related to that, how much land would be involved to power that, if not only from solar field, but the transmission lines that are accompanied with that as well.

Yeah. In terms of it being feasible, yes.

Can you repeat?

Yeah. So the question was on how feasible is it for data centers to be served with renewables? And Also, what is the land impact of that? So in terms of... Oops. Went the wrong way. So... Right now, there is a lot of fossil fuel. I'm going to speak this way, but I am mentally undressing now. There is a lot of fossil fuel already on our system. And right now, we are choosing to lock in decades more of that type of infrastructure. Could tomorrow we serve? all electricity in Wisconsin and all data centers in Wisconsin with just solar wind storage? Probably not. But we're not there yet. Right now, we're making investment decisions for the next couple of decades. And it's important to invest in feasible solutions solar wind and storage uh work really well on the grid they're low cost they have zero fuel um there are certain like in terms of how the grid is managed there are there are changes that need to happen and those are happening right now at miso utilities are learning how to manage it differently it is a different type of system than the As Corey said, turn on the button and the gas power plant gets a little bit higher. So how you take into account weather forecasting and all of that is more complicated, but it is not a challenge that cannot be met. There are many researchers, many modelers and national researchers and international researchers that say that that is a system that can function. And there are systems like Australia that are functioning with really high amount of renewable energy. So that is feasible and that last probably that last 10% of getting the last 10% of fossil fuels off the grid will probably be the hardest, but we're not facing that right now. We're facing investment decisions right now. So that's in terms of the feasibility piece. And as we have more technologies like electric vehicles that can then act as a backup battery as well to the grid, these are innovations that are coming online in the next couple of decades. In terms of the land power, Clean Wisconsin has actually done that analysis of the land it would take to serve not the data centers, but we did this analysis a couple years before the data centers when it was just electrifying our cars and electrifying our buildings. What a simple, easy time that was. And we found that the land impact, I don't have the numbers written down in my notes, but I can disseminate that later. But the land impact is not as shocking as you think it might be. I'm going to pull up one of my backup slides to talk a little bit about that. Basically, we see renewable energy and data centers to be very different types of land impacts. First of all, solar and wind, that stays in the farming hands and even provides supplemental income that allows for family farms to stay in the family. There are these air pollution climate benefits related to not... emitting the harmful air pollutants and the greenhouse gases I talked about ad nauseum in this presentation. But there's also water quality benefits, reducing the amount of pesticides being applied to this site. There's wild... life impacts, especially for pollinators. It is very standard now for these, especially solar sites, to have pollinator-friendly mixes. There is more research needed on bird impacts. Most of that research has been done not in the upper Midwest, but in more desert areas where water and lakes are more sparse. So that's something that we advocate for in these types of solar construction cases. But and then at the very end, there is this decommissioning plan. So when the solar facility is done, that land can and will go back to farming. It has stayed in the family land. That is not going to be zoned industrial data center for decades to come. So we see the land impact of renewable energy to be very different from data centers. And I can follow up with the analysis we've done and the math we've done around the acres impacted in Wisconsin from this. We also did one study that compared the energy production efficiencies of growing corn for ethanol versus installing solar panels. And on a per acre basis, about 200 megawatt solar project generates 20 to 30 times more energy than using that land to grow corn for ethanol, which is an energy product. And so with increased efficiencies, that even opens up more space for food production. So I can share some of those resources afterwards.

Kathy.

I have to just add one other renewable energy source there, and that's geothermal heat pumps. So EPIC, a data center in our midst, has the largest geothermal heat pump system in the country, maybe in North America. And we have temperatures underground that can help with this cooling. We have cold weather six months of the year that can help with the cooling of it. There's a lot of innovation. One of the things that was clear to me in the initial QTS discussions is, a lot of those facilities started in Virginia or Georgia or they didn't start somewhere that it was cold. I remember having a conversation with one of the QTS people on a really cold January day. I'm like, guys, you might notice today there's some natural cooling going on right around you. We know there are small data centers that are being creative about all of that. That's all a piece of what could be in, and again, that's probably state guidance because it is about efficiency of buildings, but there's opportunities. Yeah.

Yeah.

Okay. One last check. Anybody else with questions? I appreciate everybody for sticking. I know we went long, so thank you for sticking it out and spending some extra time together. All right, not seeing anyone else with questions, so thank you. So with that, I think that, what's that? So I think through some of the questions, we have some things to add to our growing list of follow-up items, but then any questions from staff on anything around that?

I think we'll have to go back and we've got a lot to work with.

Absolutely. All right. And so our next meeting will be, we'll return to our regular schedule, which is what's the third Wednesday or Tuesday? Eighth, excuse me. September 8th. September 8th. Second Tuesday. Yep. Okay. So with that, we don't have anybody registered for public comments. So wishing to speak. So if there's nothing else that's allowed by law, I'll entertain a motion to adjourn.

Make a motion to adjourn.

Moved by Passler.

Seconded by Richson.

Seconded by Richson to adjourn. All in favor of adjournment, say aye. Aye. Opposed? We are adjourned. Thanks again.