WEC Energy boosts spending by $1 billion as Microsoft data centers expand in Wisconsin

Adds details throughout on capital spending, demand forecast

By Laila Kearney and Pranav Mathur

Feb 5 (Reuters) - Wisconsin-based U.S. electric utility WEC Energy Group Inc WEC.N said on Thursday that it will increase capital spending by $1 billion over the next five years as it increases output to power Microsoft MSFT.O data centers.

Big Tech is racing to build energy-intensive data centers to support artificial-intelligence initiatives, pushing electricity demand to record highs and prompting deals with U.S. power companies.

Wisconsin and other U.S. Mid-Atlantic, Midwest and Southern states are so far seeing the bulk of new data center power demand requests.

Microsoft, which has purchased 2,000 acres of land in WEC's territory to develop data centers, received approvals from regulators last week to expand its campus in Mount Pleasant, Wisconsin, by 15 buildings.

"We have energy flowing to the site, and the first phase of the project is expected to go online this year," WEC CEO Scott Lauber said on a call with investors.

The updated plan increases demand forecasts by 500 megawatts.

Microsoft's Wisconsin data center expansion brings WEC's demand forecast in the area to 2.6 gigawatts by 2030. One gigawatt of power is enough to power 750,000 homes.

Vantage Data Centers is also propelling energy consumption on WEC's turf, with the developer signing on to build data centers for Oracle ORCL.N and OpenAI on 1,900 acres.

Vantage broke ground on the first phase of the project in December, and WEC said it could begin to deliver electricity to the site starting late next year.

Over the next five years, demand at the site is estimated to be 1.3 gigawatts, with the potential for 3.5 gigawatts, Lauber said.

WEC Energy Group Inc WEC.N reported a fourth-quarter profit that beat Wall Street estimates, driven by data center demand, along with an uptick in residential and commercial sales.

The Milwaukee-based company, which serves nearly 4.7 million electric and natural-gas customers across Wisconsin, Illinois, Michigan and Minnesota, said residential electricity usage rose 3.5% for the year, while total retail deliveries increased 2.2%.

The quarter included a 45-cent-per-share charge related to proceedings over infrastructure cost-recovery riders in Illinois.

On an adjusted basis, WEC posted quarterly earnings of $1.42 per share for the three months ended December 31, compared with average analysts' estimate of $1.40 per share, according to data compiled by LSEG.

(Reporting by Laila Kearney in New York Pranav Mathur in Bengaluru; Editing by Tasim Zahid and Cynthia Osterman)

((Laila.Kearney@thomsonreuters.com;))