Microsoft and PowerHouse Hillwood Holding have filed disputes with the Federal Energy Regulatory Commission over agreements governing service to their planned data centers in Wisconsin and Illinois, according to filings reviewed by Utility Dive. The conflicts arrive after FERC determined in mid-June that grid operators' interconnection rules for large loads might be insufficient, issuing "show cause" orders that identify five problems regional transmission organizations and independent system operators must address.
In a Friday filing at FERC, Microsoft argued that agreements submitted by American Transmission Co. for approval don't shield utility customers from infrastructure expenses needed to serve the company's data center expansion in Mount Pleasant, Wisconsin. The four amended Large Load Project Commitment Agreements and the Minimum Transmission Charge Agreement were hammered out by ATC and Wisconsin Electric Power Co., which are affiliated companies, without Microsoft's participation, the tech company told regulators. Despite Microsoft's stated commitment to the White House's Ratepayer Protection Pledge, the company said ATC's proposed minimum transmission charge agreement lacks a mechanism to stop WEPCo's retail customers from bearing facility costs, and large load customers could end up paying twice. Microsoft also objected to a proposed early termination fee it called an unjustified windfall payment. The Wisconsin Public Service Commission told FERC the proposed agreements represent an improvement over past practice but are "far from fully responsive" to FERC's show cause order to MISO.
Meanwhile, PowerHouse Hillwood on Aug. 14 asked FERC to reject Commonwealth Edison's "notice of cancellation" ending a transmission security agreement tied to a 1.8-GW, $20-billion data center the company is planning in Joliet, Illinois. "Until there are pro forma provisions governing transmission service agreements among PJM, eligible customers, and transmission owners, and other checks and balances to quell utility anticompetitive and unduly discriminatory behavior, the commission must remain vigilant as to the risk that utilities like ComEd will use their monopoly power as a bludgeon," PowerHouse Hillwood wrote. The joint venture between PowerHouse Data Centers and Hillwood Corp. contends that transmission security agreements developed by Exelon's utilities vary, unlike pro forma agreements, and reflect monopoly power. The disagreement with ComEd, which sparked a lawsuit by PowerHouse Hillwood, centers on when a security deposit is due.
The disputes highlight gaps in federal oversight of large load interconnections compared to generator interconnections, according to the filings. FERC's June show cause orders detailed five issues it wants grid operators to fix in their large load interconnection rules, including preventing cost shifts and improving transparency into transmission costs. Earlier this month, FERC pushed back the deadlines RTOs and ISOs had for responding to the show cause orders until mid-November. Microsoft urged FERC to hold "settlement judge" proceedings to resolve its dispute with ATC, saying the company's input into the rates, terms, and conditions is essential to ensuring the agreements can actually enable timely interconnection and operation of infrastructure needed to serve Microsoft's load. ATC and WEPCo maintain their agreements will protect ratepayers from cost shifts related to building transmission and distribution infrastructure for the Microsoft data center campus and are "directly responsive" to FERC's show cause orders. The question now is whether FERC will intervene before utilities finalize agreements that could set precedents for how billions in data center infrastructure costs get allocated across customers.