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Kansas collateral covers two years of a data-center customer's minimum bills
Oracle America Cloud Services had to post more collateral to WEC Energy Group after its parent's credit rating was cut, WEC said in its third-quarter 10-Q. The Oracle unit will take service under Wisconsin's new tariffs for very large customers, and WEC has already spent heavily on the plants and lines to serve it. The unit and its parent posted what the contracts required, and WEC says the amount will rise as more project costs come in.
Utilities in Kansas, Michigan and Wisconsin are committing billions to data-center load on the strength of long contracts that make the customer pay whether or not it uses the power, and Evergy and WEC both sell stock through at-the-market programs to help pay for their plans. Kansas is the only one of the three that has published how much collateral a customer must post: two years of minimum bills. Past whatever collateral a utility holds, the backstop is the tenant's own credit.
Each of the three has put figures on the build. Evergy reported $8.9bn of remaining contractual minimum payments from large-load customers at Sept. 30, over a weighted 15 years, as it disclosed a new [1.4-gigawatt letter of intent with Digital Realty](https://www.rackline.news/story/15rrdcz). WEC's 10-Q budgets $2.06bn of spending for very-large-customer resources this year, $4.30bn in 2027 and $5.03bn in 2028, and WEC opened a [$4bn at-the-market stock program](/story/vqrddh) on Nov. 4. DTE Energy said in July that a 1-gigawatt data-center agreement would add about $5.0bn of capital spending through 2032.
WEC's spending for very large customers passes the rest of its Wisconsin plan in 2027
WEC Energy planned capital spending in Wisconsin, $bn
$bn
2027 · Very large customers — Overtakes the rest of Wisconsin
View chart data
| Year | Very large customers | Rest of Wisconsin |
|---|---|---|
| 2026 | $2.06 | $2.52 |
| 2027 | $4.30 | $3.00 |
| 2028 | $5.03 | $2.93 |
Under the large-load plan the Kansas Corporation Commission approved for Evergy in November 2025, customers sign for at least 12 years, plus up to five years of ramp, and pay a monthly minimum based on 80% of contract demand. They post collateral equal to two years of minimum bills. That covers 16.7%* of the minimum bills on a 12-year contract and 11.8%* on a 17-year one.
The rest of the Kansas protection is an exit fee. A customer that leaves early owes every minimum bill left on its contract, which is a large claim on the customer but not cash the utility already holds. In October, Evergy asked the commission to approve a further plan for newly signed large-load customers and requested an order in February 2027.
Michigan's approved contract gives the utility a bigger claim. The contracts between DTE Electric and Google for a data center in Van Buren Township, which Michigan regulators approved on Oct. 1, run 20 years, against the five years normally required under DTE's large-load rate. Google must pay a minimum of 80% of contracted demand, against 50% to 65% in the standard rate. If it cancels, it must ultimately pay at least 15 years of minimum monthly charges. The commission also required credit and collateral terms but its release gives no amount.
Wisconsin ties the customer's obligation to specific assets. Under WEC's Very Large Customer and Bespoke Resources tariffs, approved in May for new loads above 100 megawatts, a customer that terminates or downsizes still pays for the generation and distribution built for it unless the facilities can be repurposed with regulators' approval. The return on equity, set between 10.48% and 10.98% with each customer, and the 57% equity ratio are fixed for the life of the agreement, and the revenue and costs recovered through the tariffs stay out of future rate cases.
Only Kansas fixes data-center collateral at two years of bills
Key protections in large-load contracts approved for three Midwest utilities
| Utility and state | Minimum bill | Contract term | Collateral | If the customer leaves early |
|---|---|---|---|---|
| Evergy, Kansas | 80% of contract demand | At least 12 years, plus up to 5 years of ramp | Two years of minimum bills | Pays all remaining minimum bills |
| DTE Electric (Google), Michigan | 80% of contracted demand | 20 years | Required; amount not disclosed | Pays at least 15 years of minimum charges |
| WEC Energy, Wisconsin | Not stated in 10-Q | Life of the dedicated plant; 20 years for wind and solar | Required; terms set by regulator and contested | Pays for dedicated plants and distribution unless repurposed with regulator approval |
In Wisconsin the collateral terms have been contested from the start. The commission changed the credit support and collateral provisions when it approved the tariffs. WEC's Wisconsin Electric and two intervenors asked it to reconsider those changes, and the petition was deemed denied when the commission did not act within 30 days. A very large customer separately challenged the collateral terms in circuit court and then withdrew.
One large power buyer has now offered assurances of its own. OpenAI said on Nov. 5 that at future campuses it owns and operates, it will provide financial assurances before major spending begins so other customers are protected if a project is delayed, reduced or canceled. It did not say how large those assurances would be.
For a lender to a utility, Wisconsin's structure gives the clearest claim, because the customer's obligation is tied to specific plants with a fixed return. Michigan's Google contract gives a long, large claim on Google. In Kansas, everything past the first two years of bills rests on the tenant's credit.
The other side of the argument is that the tenants are strong. If the hyperscalers and their cloud units stay solid credits for 15 to 20 years, minimum bills behave like coupons on a bond, and the size of the collateral barely matters. The downgrade of the Oracle unit's parent shows that a tenant's credit can change before service even starts, and that a collateral call is what a utility can use when it does.
* Rackline estimate, calculated from the Kansas Corporation Commission's Nov. 6, 2025 description of Evergy's large-load plan: two years of collateral divided by the 12-year minimum term (16.7%) and by a 17-year term that includes the maximum five-year ramp (11.8%). It assumes level minimum bills over the term.