Powering Data Centers
Safety and reliability are part of our core values at MGE. Your community energy company is consistently top-ranked for electric reliability among utilities nationwide.
We know that large energy users—like data centers—raise important questions about their impact on our community and energy affordability. Our collaborative approach to serving prospective large customers is designed to protect our existing customers while supporting economic development.
Our customers rely on MGE for safe, reliable, affordable and sustainable energy to power their households and businesses. As your community energy company, MGE is committed to supporting our area’s growth responsibly and in a way that meets the needs of all customers.
How MGE Serves
MGE has decades of planning, investment and operational excellence to support our top-ranked reliability. That foundation helps to ensure we’re prepared to serve evolving energy needs, including those of large-scale data centers, without compromising our obligation to serve all customers safely, reliably and affordably.
Reliable, secure, high-quality energy is essential to our local economy and to emerging industries like AI and data-intensive technologies. MGE is committed to supporting innovation—in a way that maintains a strong, resilient and adaptable grid while protecting other customers from cost and service impacts. By keeping our grid strong, adaptable and ready for growth, we help to advance energy security and economic development in our community.
We have a regulatory process to protect other customers from associated costs.
Wisconsin has a robust regulatory compact to protect customers. The Public Service Commission (PSC) governs almost all aspects of utilities—including the rates customers pay, approval for new generating facilities, potential environmental impacts of operations and service to customers—to help ensure safe, reliable and affordable service.
The PSC has no direct regulatory oversight of the construction or operation of data centers. However, it does regulate the utilities that serve them.
To serve a large-scale data center in the MGE service territory, MGE would seek approval from State regulators to charge that customer under a rate designed specifically for very large customers. This new rate would be structured to ensure the very large customer would pay the incremental costs associated with serving the facility and designed to prevent cost shifts to all other customers. Other customers would, however, benefit from the increased resiliency provided by any grid upgrades necessary to serve the data center.
We remain committed to our goal of net-zero carbon electricity—and data center development could help to advance clean energy.
We are building a more resilient and adaptable grid as we evolve with new and emerging energy technologies and the needs of those we serve. We continue to work toward our goal of net-zero carbon electricity, investing heavily in cost-effective, carbon-free generation.
Data centers are high energy users and create demand for energy. Their sustainability goals could help further—or even accelerate—the transition of the electric grid toward cleaner energy sources through MGE investment in clean energy to power data center operations.
What They Do
Data centers are essentially warehouses for computing infrastructure—they help power the Internet. They're like a giant library of filing cabinets that store, process and transmit data, allowing access to digital materials, like photos and apps, and services, like video streaming and social media.
Part of Everyday Life
Data centers provide connectivity to enable our digital economy and everyday digital activities like sending email, online shopping and accessing our information in "the cloud." If you use a mobile phone or smart device, data centers help to keep you connected.
Already Here
Several smaller, traditional data centers already operate in the MGE service territory, with companies using stand-alone facilities or operating data centers within their existing facilities. Each deploys technology integral to their business operations and customers. MGE has served these local data centers for years, working with them to meet their specific energy needs like we do with any other major commercial or industrial customer.
The needs of data centers vary with size and purpose. Our service territory’s smaller, distribution-connected data centers:
- Connect directly to the existing distribution grid,
- Use existing distribution and transmission infrastructure and;
- Provide measurable financial benefits to customers.
Their load lowers systemwide costs by spreading fixed distribution and generation expenses across more kilowatt-hours, helping to reduce rates for all customers.
As high energy users, all data centers create a steady demand for electricity. As more facilities consider our region, their sustainability commitments present a potential opportunity to accelerate MGE’s investment in clean energy and further advance investment in our systems. MGE’s ability to serve large commercial loads means we are ready to accommodate data center growth without harming service or affordability for existing customers.
Frequently Asked Questions
It would not raise rates for all other customers.
To serve a large-scale data center in the MGE service territory, MGE would seek approval from State regulators to charge that customer under a rate designed specifically for very large customers. This new rate would be structured to ensure the very large customer would pay the incremental costs associated with serving the facility and designed to prevent cost-shifts to all other customers.
Wisconsin has a regulatory framework to protect customers through State regulation that, among other things, provides for "just and reasonable" rates. Utility rates are set through a transparent, public rate-making process.
A larger, more diversified customer base can help lower energy costs.
There are costs associated with connecting a customer to the electric grid, regardless of how much energy that customer uses. These costs cover items ranging from our local customer service center and administrative costs to the poles, wires and other equipment that make up a dependable electric grid. All customers share the costs of building, maintaining and operating a safe, reliable and resilient electric grid.
When large customers, such as data centers, are added to the system, they can help manage these fixed costs by:
- Sharing the cost of the grid—As high energy users, data centers help by spreading the cost of maintaining the electric grid across more energy usage.
- Making more efficient use of utility infrastructure—Data centers are round-the-clock electric users with a consistent load, which makes better use of equipment built to meet the peak demand of all customers.
- Providing steady, reliable demand—With their high-usage and predictable needs, data centers can help to support long-term rate stability for all customers.
Any incremental grid investment by MGE to support a data center’s specific energy needs would be recovered through a very large customer rate to prevent cost-shifts to all other customers. Refer to the previous FAQ for more information about the impact to rates.
Data centers are high energy users and thereby create demand for energy. Their sustainability goals could help further the transition toward a greener grid and even accelerate that transition through clean energy generation investment by MGE to serve that data center.
We continue to work toward our goal of net-zero carbon electricity, investing heavily in carbon-free energy generation to serve all customers. Many data centers have sustainability goals, and MGE would collaborate to help them achieve those goals.
No. Serving new data centers would not negatively impact our service to other customers.
Investment in our distribution system on behalf of and paid for by a data center could serve to enhance the reliability and resiliency of our electric grid for the benefit of all. MGE would work closely with any proposed large-scale data center customer to develop a process that can fully support their needs, without putting strain on our current customers. This includes:
- Ensuring our existing customers remain protected, with no impact on their reliable service or costs.
- Planning for any new generation to meet the additional demand of the data center and paid for by the data center through a special rate.
- Identifying any other required system upgrades, paid for by the data center, to meet their needs and to maintain robust system performance.
While data centers use a large amount of electricity, reliability is essential and part of MGE’s fundamental obligation as a critical services provider. Our collaborative approach through Wisconsin’s established regulatory process grows the grid responsibly while keeping power reliable for everyone.
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