Wisconsin residential and business utility customers owe nearly $1 billion on “stranded assets” — power plants that have been or will soon be shut down.
That total will likely grow over the next five years with additional coal plants scheduled to cease operations.
Customers must pay not only for the debt taken on to build and upgrade the plants, but also an essentially guaranteed rate of return for their utility company owners, long after the plants stop generating revenues.
“We really have a hard time with utilities profiting off of dead power plants for decades,” said Todd Stuart, executive director of the Wisconsin Industrial Energy Group.
The $1 billion tab looms as Wisconsin utility companies aim to generate unprecedented amounts of electricity for at least seven major high-tech data centers that are proposed, approved or under construction. By one estimate, just two of the data centers, which are being built to support the growth of artificial intelligence, would use more electricity than all Wisconsin homes combined.
Of the five major investor-owned utilities operating in Wisconsin, two — We Energies and Wisconsin Public Service Corp. — have stranded assets on the books. Both are subsidiaries of Milwaukee-based WEC Energy Group.
In December 2024 We Energies estimated a remaining value of more than $700 million across three power plants with recently retired units: Pleasant Prairie in Kenosha County; Oak Creek, south of Milwaukee; and Presque Isle, a plant on Michigan’s Upper Peninsula.
Wisconsin Public Service Corp.’s December 2024 report listed roughly $30 million in remaining value on recently retired units at two power plants.
WEC Energy Group also noted a remaining value of just under $250 million for its share of units at Columbia Generating Station slated to retire in 2029, alongside a remaining value of roughly $650 million for units at Oak Creek scheduled to retire next year.
Its customers will pay off that total, plus a rate of return, for years to come.
The company estimates that closing the Pleasant Prairie plant alone saved $2.5 billion, largely by avoiding future operating and maintenance costs and additional capital investments.
How stranded assets occurred: overcommitting to coal
Utility companies get permission to build or expand power plants and to raise rates from the three-member state Public Service Commission. The governor-appointed commissioners are charged with protecting ratepayers and utility company investors.
Stranded assets have occurred across the nation, but while other utilities around the country moved to alternative energy, Wisconsin utilities and the PSC overbet on how long coal-fired plants would operate:
- In the years before We Energies pulled the plug on the Pleasant Prairie Power Plant, the plant had mostly gone dark in spring and fall. Not only had coal become more expensive than natural gas and renewables, but energy consumption stayed flat. By 2016, two years before Pleasant Prairie’s closure, natural gas eclipsed coal for electricity generation nationally.
- In 2011, We Energies invested nearly $1 billion into its coal-fired Oak Creek plant south of Milwaukee to keep it running for 30 more years. The 60-year-old plant is now scheduled to completely retire in 2026 with $650 million still owed. That will cost ratepayers nearly $30 per year for the next 17 years, according to RMI, a clean energy think tank. The majority of debt tied to those units stems from “environmental controls we were required to install to meet federal and state rules,” WEC Energy Group spokesperson Brendan Conway said.
- In 2013, to settle pollution violations, Alliant Energy announced more than $800 million for the Columbia Energy Center plant in Portage, north of Madison. It is expected to operate until at least 2029.
The PSC allowed utility companies “to overbuild the system,” said Tom Content, executive director of the Wisconsin Citizens Utility Board, a nonprofit advocate for utility customers. “I think the mistake was that we allowed so much investment.”
Utilities “profit off of everything they build or acquire,” Stuart said, “and so there is a strong motivation to put steel in the ground and perhaps to even overbuild.”
Conway said the utilities’ plans to retire plants amount to a net positive for customers.
“We began our power generation reshaping plan about a decade ago,” he said. “This plan reduces emissions and is expected to provide customers significant savings — hundreds of millions of dollars — over the life of the plan.”
Guaranteed profits add to ratepayer burden
The built-in profits that utility companies enjoy, typically 9.8%, add to the stranded assets tab.
When the Public Service Commission approves construction of a power plant, it allows the utility company to levy electricity rates high enough to recover its investment plus the specified rate of return — even after a plant becomes a stranded asset.
When the Pleasant Prairie plant was shut down in 2018, the PSC ruled that ratepayers would continue to pay We Energies to cover the cost of the plant itself, plus the nearly 10% profit. The plant’s remaining value, initially pegged at nearly $1 billion, remained at roughly $500 million as of December 2024.
Eliminating profits on closed plants would save ratepayers $300 million on debt payments due to be made into the early 2040s, according to CUB.
New ‘stranded assets’ threat: data centers
We Energies wants to add enough energy to power more than 2 million homes. That effort is largely to serve two Milwaukee-area data centers, one under construction in Mount Pleasant and one approved in Port Washington.
Data centers are also proposed for Beaver Dam, Dane County, Janesville, Kenosha and Menomonie.
The energy demand raises the risk of more stranded assets, should the data centers turn out to be a bubble.
“The great fear is, you build all these power plants and transmission lines and then one of these data centers only is there for a couple years, or isn’t as big as promised, and then everybody’s left holding the bag,” Stuart said.
Democratic and Republican leaders are calling for data centers to pay their own way and not rely on utility ratepayers or taxpayers to pay for their electricity needs.
Opposition led nearly 10,000 people to become members of the Stop the Menomonie Data Center group on Facebook. In Janesville, voters are trying to require referendums for data centers. In Port Washington, opposition to the data center there led to three arrests during a city council meeting.
Utilities are scheduled in early 2026 to request permission from the Public Service Commission to build new power plants or expand existing plants to accommodate data centers.
Some states, though not Wisconsin, have adopted laws prohibiting the costs of stranded assets from data centers being passed onto ratepayers.
Shifting cost burden to utility companies
A financial tool called securitization reduces the burden on ratepayers. Utilities can convert a stranded asset into a specialized bond with a lower interest rate than the utility’s standard profit margin.
A 2024 National Association of Regulatory Utility Commissioners report noted persuading utilities to agree to securitization can require incentives from regulators or lawmakers.
In Wisconsin, utilities can securitize only the cost of pollution control equipment on power plants, though few utilities have used it.
We Energies opted in 2020 to securitize the costs of pollution control equipment at the Pleasant Prairie plant, saving an estimated $40 million. “We will continue to explore that option in the future,” Conway said.
But the PSC expressed “disappointment” in 2024 when We Energies “was not willing to pursue securitization” to save customers $117.5 million on its soon-to-retire Oak Creek coal plant. The utility noted state law doesn’t require securitization.
In 2023, two Republican state senators introduced legislation to allow the Public Service Commission to order securitization be used to refinance all debt on stranded assets. The bill was opposed by the Wisconsin Utilities Association and did not get a hearing.
Democratic Gov. Tony Evers proposed additional securitization in his 2025-27 budget, but the Joint Finance Committee scrapped the provision.
Stuart said that if utilities won’t agree to more securitization, they should accept a lower profit rate once an asset becomes stranded.
“It would be nice to ease that burden,” he said. “Just to say, hey, consumers got to suck it up and deal with it, that doesn’t sound right. The issue of stranded assets, like cost overruns, is certainly ripe for investigation.”
Comprehensive planning required elsewhere — but not Wisconsin
Avoiding future stranded assets could require a level of planning impossible under Wisconsin’s current regulatory structure.
When the state’s utilities propose new power plants, PSC rules require the commission to consider each new plant alone, rather than in the context of other proposed new plants and the state’s future energy needs. Operating without what is known as an integrated resource plan, or IRP, opened the PSC to overbuilding and creating more stranded assets.
”We’ve been doing some of these projects kind of piecemeal, without looking at the bigger picture,” Stuart said.
Structured planning tools like IRPs date back to the 1980s, when concerns about cost overruns, fuel price volatility and overbuilding prompted regulators to step in. Minnesota and Michigan require utilities to file IRPs, as do a majority of states nationwide.
Evers proposed IRPs in his 2025-27 state budget, but Republican lawmakers removed that provision.
Madison Gas and Electric argued that its current planning process is superior to the IRP requirements in neighboring states. “A formal IRP mandate would add process without improving outcomes,” spokesperson Steve Schultz said.
How to influence decisions relating to stranded assets
The devil will be in the details on whether the Public Service Commission adopts strong policies to prevent the expected wave of new power plant capacity from becoming stranded assets, consumer advocates say.
The public can comment on pending cases before the PSC via its website, by mail or at a public hearing. The commission posts notices of its public hearings, which can be streamed via YouTube.
The PSC issued a statement for this story noting that utilities can opt to do securitization to ease the financial burden on ratepayers, adding:
“Beyond that, the commission has a limited set of tools provided under state law to protect customers from costs that arise from early power plant retirements. It would be up to the state Legislature to make changes to state law that would provide the commission with additional tools.”
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