Oracle could face $7B collateral bill for Wisconsin data centre: FT

Oracle (ORCL) could face more than $7B in collateral requirements for a massive data centre in Wisconsin after state energy regulators upheld strict credit rules to protect residents from rising power costs, according to the Financial Times.

The Public Service Commission of Wisconsin declined to reconsider rules it placed on utility We Energies that would require Oracle to provide a $7B letter of security at an annual cost exceeding $100M,  the report said.

The nearly one-gigawatt data centre located in Port Washington, Wisconsin, is a crucial investment by Oracle to fulfil its $300B contract with OpenAI (OPENAI) to supply computing power. The added costs to secure local power contribute to challenges facing the company’s artificial intelligence plans, including growing debt and rapid cash spending.

We Energies’ tariff for very large customers requires any data center developer with an S&P rating below single A minus to post collateral as cash or a letter of credit. The collateral amount is based on the value of power plants and transmission lines built to serve the data center, the FT reported.