The Midwest’s data center boom requires a vast electrical transmission buildout to keep servers online, and transmission developers are clamoring for a share of the action.
An example of that tug-of-war played out last week, when the regional grid operator for much of the Upper Midwest reversed its earlier decision to allow a developer backed by the investment firm Blackstone to build a series of substations in eastern Wisconsin.
Instead, the operator handed the substations to the American Transmission Company (ATC), which owns and operates most transmission lines in eastern and central Wisconsin. The company argues it’s better-positioned to complete the project before a new Port Washington data center comes online by early 2028, five years ahead of the transmission project’s original deadline.
The about-face is a win for Wisconsin’s largest transmission developer after a series of losses in Wisconsin’s Assembly, where lawmakers have repeatedly rejected a proposal to give regionally established developers like ATC a monopoly over portions of multistate transmission projects within Wisconsin, leaving the door open for competition.
The new arrangement itself likely won’t drive up costs for Wisconsin ratepayers. But ATC will now fold the substations into a larger $1.3 billion buildout to serve the Port Washington campus — another phase in the ongoing fight over who will pay to supply power for new data centers.
How the Midwest’s grid is planned and paid for
The North American grid is an ever-evolving network of transmission lines and substations that carry electricity from generators to customers.
In much of the country, nonprofit “independent system operators” coordinate regional power grids, managing a wholesale electricity market and interstate transmission projects. Wisconsin is within the territory of the Midcontinent Independent System Operator (MISO), which spans from the Upper Midwest to Louisiana.
MISO has approved roughly $32 billion in transmission upgrades for the Upper Midwest since 2022, including new “backbone” power lines capable of carrying a higher voltage than existing lines in the region.
Among the latest round of projects: a series of transmission lines and substations in eastern Wisconsin.
Just months after MISO’s board approved the eastern Wisconsin buildout in 2024, Port Washington’s city council approved a $15 billion data center on the city’s northern edge. Three new substations outlined in MISO’s plans are within easy reach of the campus.
Blackstone-backed developer takes the lead
Four transmission developers bid on the eastern Wisconsin upgrades, including ATC, which submitted a joint bid with Dairyland Power Cooperative and the nonprofit WPPI Energy, owned by municipal utilities in Wisconsin, Iowa and Michigan’s Upper Peninsula.
MISO initially awarded the project to Viridon, owned by Blackstone Energy Transition Partners — a private equity fund under the umbrella of Blackstone, the world’s largest alternative asset management firm.
Viridon’s roughly $350 million bid was by far the lowest — just over half of MISO’s estimate and more than $100 million below the next-cheapest bid. In its January announcement, MISO acknowledged the budget “may not be achievable” but cited Viridon’s promises to limit cost overruns and profits as reasons to pick the company over its competitors.
Who pays for transmission depends on who builds it
When MISO awards a long-range transmission project, the developer spreads costs across customers in multiple states, meaning each customer pays less.
When a developer plans a transmission project within its own territory, that developer’s customers bear the costs alone.
Transmission developers pass costs along to customers through electrical utility bills. We Energies, for instance, estimates that transmission-related costs account for about 10% of customers’ bills.
Those fees include a “return on equity” for shareholders: profits generated for each dollar invested. As of 2025, ATC collects a 10.48% return.
Competitive bidding for multistate projects is relatively new. The Federal Energy Regulatory Commission (FERC), which oversees regional grid operators like MISO, began requiring competitive bidding for regional projects in 2011, following criticism that monopoly developers were driving up ratepayer costs.
Competition for Midwestern projects escalated after MISO’s board approved billions of dollars in grid upgrades in 2022. MISO was “ahead of the game in terms of how much regional transmission it was planning” compared to other regional grid operators, said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School.
Grid expansion draws new competitors and investors
MISO’s transmission buildout plans offered utilities a golden opportunity to pick up new, dependable revenue streams. “I would have said generational,” Peskoe said, “but then we have the data center rush starting shortly thereafter.”
Dozens of utilities, including some of the nation’s largest, have since lined up to bid for MISO transmission projects.
Also competing for a share of the buildout: newly formed developers financed by powerful investment firms.
Blackstone sponsored Viridon’s launch in 2023, and the new developer soon threw its hat into the ring for Midwestern transmission projects. Stonepeak, a smaller private equity firm, entered in 2025, backing startup developer Longview Infrastructure.
Well-established utilities have their own ties to multinational investment firms.
As of December 2025, investment giants BlackRock and the Vanguard Group both owned more than 10% of shares in Wisconsin’s four largest investor-owned utility companies: Wisconsin Electric Power Company, Xcel Energy, Alliant Energy and Madison Gas and Electric Company.
State Street, another powerful investment firm, owns more than 5% of shares in each utility.
The four major utilities collectively own a majority of ATC.
Duluth-based utility ALLETE, also an ATC investor, belongs to the Canada Pension Plan Investment Board. The board’s purchase of ALLETE last year gave more than 22 million Canadians a chance to shore up their retirement savings through the Midwest’s grid buildout.
A fight over competition
ATC and its peers have criticized competitive bidding from the outset. As MISO set up the new bidding process, Peskoe said, utilities fought the change in federal court and urged state legislatures to pass right-of-first-refusal (ROFR) laws.
ROFR laws give local utilities first dibs on transmission projects within their territory, including those planned by regional grid operators.
In the view of Wisconsin’s utilities, ROFR laws ensure that utilities with local experience lead transmission projects, avoiding delays and missteps newcomers might face. “Out-of-state single-project developers lack local connection,” an ATC spokesperson wrote in an email to Wisconsin Watch. “We maintain relationships with our regulators that go beyond a single project.”
But a coalition of critics, including many Midwestern ratepayer advocacy groups, argue that ROFR laws drive up consumer costs by stifling competition and preserving local monopolies. “We firmly believe that competitive bidding makes sense,” said Tom Content, executive director of Wisconsin’s Citizens Utility Board.
MISO has favored lower-cost bids thus far, but ATC argues that celebrating the cost savings from competitive bidding is premature. “Evidence of a low bid is not evidence of cost savings,” the company spokesperson wrote, because bid prices often do not match final project cost. Substantial overruns are common, even in projects without competitive bidding.
The two sides have battled in state legislatures and courts across the Midwest for more than a decade. Utilities prevailed in Minnesota and Michigan; Iowa’s Supreme Court struck down a ROFR law in 2023 after a national developer challenged its constitutionality.
Despite extensive lobbying, ROFR bills have repeatedly failed in Wisconsin’s Assembly, including one introduced in 2025 by Assembly Speaker Robin Vos, R-Rochester.
That leaves ATC to compete for the MISO-planned transmission upgrades, including the plans for eastern Wisconsin.
Data center complicates planning
Shortly after MISO began soliciting bids for the project in February 2025, ATC alerted the grid operator to a complication. The Port Washington data center would need to connect to the grid by the end of 2027, and ATC would be responsible for making the plug-in possible with new substations designed to support the campus’ vast energy needs.
ATC jointly bid on MISO’s eastern Wisconsin grid upgrades in July 2025.
Two months later, the company filed an application with Wisconsin’s Public Service Commission (PSC) to build substations and transmission lines to serve the new data center campus. ATC projected a price tag of at least $1.3 billion for its broader project, which includes infrastructure not in MISO’s reliability-focused plan for eastern Wisconsin. Both proposals called for three substations — albeit at different scales, on different timelines and for different purposes — in roughly the same locations.
From ATC’s perspective, at least one set of substations would need to be built in time for the Port Washington data center’s opening day. If MISO awarded its project to ATC, the company could address regional grid reliability concerns and serve the data center in one fell swoop, spreading some costs across the Upper Midwest to ease ratepayer burdens. Even if MISO didn’t award the project to ATC, the utility said it would still seek state approval to build the necessary substations.
But others saw the overlap as an attempt to sidestep competition.
“We have concerns that attempts are being made to circumvent competitive bidding,” Content said.
MISO soon raised concerns of its own with the Wisconsin PSC. In early January, the grid operator argued that ATC was effectively applying to build the “same substations” as those outlined in its own eastern Wisconsin project. Because MISO had not yet selected a winning bidder for its transmission upgrades, it urged regulators to “consider this uncertainty” before allowing ATC to move forward.
After MISO selected its bid, Viridon also raised objections.
“Put simply, if ATC constructs the substations, Viridon cannot, and ATC will have circumvented MISO’s planning processes,” the developer’s attorneys wrote in a motion filed with the PSC. Allowing ATC to build the substations, they added, would prevent costs from being distributed across multiple states, “potentially requir(ing) Wisconsin customers to pay more.”
ATC pushed back, arguing the projects serve different purposes. The project MISO envisioned aims to improve regional grid reliability and did not require a rapid turnaround, ATC attorney Amy Miller wrote in filings with the PSC. The project under consideration by the PSC, on the other hand, was tied to a specific customer with a firm deadline.
ATC emphasized that Viridon is not yet certified as a public utility in Wisconsin — a process that could take a year or more. That timeline, ATC argued, makes it impossible for Viridon to complete the substations in time. “MISO cannot cause Wisconsin customers to go without timely access to power,” Miller wrote.
Vantage Data Centers echoed the urgency, telling regulators it had “a considerable amount to lose” if the substations aren’t ready by the time the Port Washington campus opens.
MISO changes course — benefiting ATC
Behind the scenes, the timeline began to shift.
Shortly before filing its PSC application last fall, ATC asked MISO to expedite a review of its eastern Wisconsin upgrades in light of the data center’s plans.
MISO adjusted its schedule in February, setting a new in-service date of Dec. 1, 2027. Viridon submitted a plan to meet that deadline, Jeff Dodd, president of Viridon’s Midwestern subsidiary, told Wisconsin Watch.
The grid operator wasn’t persuaded.
In a revision released quietly on Thursday, MISO reassigned the substations to ATC, noting its “uncertainty” that Viridon could clear administrative hurdles in time.
The reassignment is a first for MISO. The grid operator has previously worked with developers to update plans when problems arose, with the exception of a 2023 case in which MISO canceled a project because of Texas’ right of first refusal law.
Viridon retains a fraction of MISO’s original project: a set of transmission lines and one substation scheduled for completion by 2033.
Under the new arrangement, Midwestern customers will collectively cover the costs of Viridon’s project and about $40 million of ATC’s substation upgrades.
The regional cost sharing of the substations is a small relief for ratepayer advocates. ATC now plans to fold the substations into the larger grid buildout it brought to the PSC last September, which includes transmission lines needed to serve the Port Washington data center. Wisconsin ratepayers alone are set to cover the remainder of the project’s more than $1 billion budget.
“Now that the dispute over ownership of the substations is resolved,” Content wrote in an email to Wisconsin Watch, “our overriding concern is over the costs of the transmission line itself that ATC has proposed. Critical changes are needed to prevent utility customers across Wisconsin as well as customers in Michigan’s Upper Peninsula from footing the bill for this project and other data center-feeding power lines that should be paid for by the tech companies.”
The final outcome for the Wisconsin transmission projects still hinges on state regulators. Neither Viridon nor ATC can begin construction on their respective substations or transmission lines without approval from the PSC. The commission is reviewing ATC’s application and weighing where the infrastructure will be built.
For now, construction crews are racing to bring the Port Washington data center online by the end of next year. The PSC will soon decide who pays for the power to run it.
This article first appeared on Wisconsin Watch and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
