Meta tells investors its AI buildout is working. According to The New York Times, it tells the IRS the whole thing is an experiment. And last year that cut its tax bill by almost four billion dollars. You're listening to The Data Center Daily. On Tuesday's rundown: Meta's research credit on data center chips, Michigan's terms for Google's Van Buren Township campus, MISO's fast lane for big loads, TeraWulf's gigawatt in Kentucky, and a colder IPO window for data center builders.
Kashmir Hill, Jesse Drucker, Eli Tan and Mike Isaac of The New York Times, as published in The Seattle Times:
Here’s what Meta is doing: For tax purposes, the company classifies its enormous, multibillion-dollar data centers as “pilot models.” Under a tax credit created in the 1980s to spur innovation, companies can get a rebate for supplies, but only if they are being tested in an experimental effort, not standard business operations. Meta is claiming that the costly AI computer chips it buys from companies, including Nvidia, are entitled to a taxpayer-provided discount as part of the experiment.
The numbers come from Meta's filings. The research credit cut its taxes by seven hundred million dollars in 2023, two billion in 2024 and three point nine billion in 2025. The Times says Meta started claiming it for data centers two years ago, and labels chips bound for AI sites differently from chips headed to standard facilities. That detail comes from people familiar with the company who spoke anonymously. And the chips are the least experimental thing in the building. Rack layouts and networking thousands of GPUs, maybe. But the Nvidia part is known to work. James Shannon, the congressman who sponsored this credit in 1981, told the Times it was meant for people power, not making things. His words: this has gone way, way beyond what anybody could have imagined. Meta's response, through spokesperson Andy Stone: two hundred billion in R&D over five years, fifty-seven billion in the last year alone, and it uses incentives Congress set up decades ago. But look at the reserve. Meta's unrecognized tax benefits rose forty-five percent in two years, to eighteen point seven four billion, and the first factor it lists is uncertainty around its research credits. So its own accountants are pricing in a possible loss. EY signed off, and per the Times it has since pitched other companies on using the credit for AI chips. If that spreads, the after-tax price of a GPU turns into a tax policy fight.
MetroDetroitToday.com, on the Michigan Public Service Commission's order in case U-22058:
In addition, the CCAA terms require Google to pay for DTE Electric to develop up to 1,600 megawatts (MW) of renewable energy and 480 MW of battery energy storage to serve the data center. According to DTE Electric, the data center is expected to begin taking service in December 2027 with a maximum load achieved by December 2028.
That's the clean capacity half of two contracts the commission approved on Thursday, October 1, between DTE Electric and Google for a campus in Wayne County's Van Buren Township. The supply agreement runs twenty years, against the five DTE's large-load rate normally requires. Minimum billing is eighty percent of contracted demand, versus fifty to sixty-five. Leaving early costs at least fifteen years of minimum monthly charges, and there's collateral on top. Those are real terms. An eighty percent minimum bill is how you keep a stranded substation off a household bill. And this went through a full contested case, with the attorney general seeing the confidential filings. Compute Law notes that DTE's Oracle deal in Saline Township was approved without a hearing. Two cautions. DTE says the contracts deliver a one point seven billion dollar benefit to other customers over twenty years. That's DTE's claim, not the commission's. And the approval is conditional. DTE has until October 31 to file a letter accepting every condition. One point six gigawatts of renewables and close to half a gigawatt of storage, utility-owned, Google-paid. I'd still like the load figure next to that. The commission's summary never puts a megawatt number on the data center itself.
Ethan Howland, writing in Utility Dive, on MISO's new filing at FERC:
Under the proposal, the commercial operation date for the generating facility and the in-service date for the associated large load must be within three years from the date the LARS application is submitted, according to MISO.
MISO filed on Friday, October 2, for what it calls a Large Load Addition Resource Study. It's a hundred twenty days, for loads above two hundred megawatts with generation in the same local resource zone, and MISO's ten zones broadly follow state lines. The load can phase in, but must take its full requested transmission service by the time the generator starts running, and the two stay paired for at least fifteen years. Up to ten applications go through each of three annual windows, with non-refundable deposits. Projects already in the generator queue aren't touched. Fifteen years, married to the plant. Fine. So what happens when the tenant walks in year eight? Somebody owns generation sized for a load that's gone, and nothing in the coverage says who. MISO isn't selling it as cheap. It told FERC the goal is not necessarily the lowest-cost solution for either side, but the best fit for both. And it's partly a response to FERC's June 18 show-cause order finding MISO's large-load rules inadequate. That order, as it happens, is described in the Michigan commission's DTE decision we just covered. MISO's own forecast has load growing one to three percent a year through 2044, driven by data centers and manufacturing. And there's no deposit figure in the reporting. That deposit is the whole filter against speculative requests. MISO wants a ruling by December 2 so the first study window can open early in 2027.
AI Industry Today, on TeraWulf's Muskie campus in eastern Kentucky:
But the wording matters. TeraWulf has not announced a signed tenant for Muskie, and the October expansion should not be treated as evidence that 1 GW has already been leased to an AI company. The company is securing utility capacity ahead of customer deployment rather than announcing a completed data center lease.
The news itself: amended agreements with Kentucky Power, an AEP company, signed October 1 and announced Monday, double Muskie's contracted service from five hundred megawatts to one gigawatt. The second five hundred moves up from 2030 to 2029, subject to the Kentucky Public Service Commission and the utility's construction schedule. The first phase still starts ramping in 2028. And the wires are a real build. IN Power reports Kentucky Power is planning a new seven sixty-five kV substation called Venator in Boyd County, about two and a half miles of seven sixty-five line, and two parallel three forty-five circuits. Final routes aren't picked yet. So that 2029 date runs through landowner meetings. One caution on the headline number. A gigawatt of service isn't a gigawatt of IT. TeraWulf's August materials put Muskie at roughly eight hundred megawatts of critical IT. CEO Paul Prager says customer interest has been tremendous. Name one. Until then it's a power position, and in this market even that is worth something.
Maureen Farrell, writing in The New York Times, on SB Energy's public offering:
But the offering has been delayed as investors question the company’s sought-after valuation of $50 billion or more, according to interviews with four people familiar with the deal’s marketing efforts. So far, bankers have struggled to find enough buyers of SB Energy stock within price ranges the company and its bankers had sought.
SB Energy is the landlord on OpenAI's Pike County campus in Ohio, which we covered Sunday. It had planned to list in September, and per the Times it's now not expected before mid to late October. It projects a four hundred thirty-nine billion dollar revenue backlog over roughly twenty years starting in 2028, mostly from that one site, and it hasn't put a data center into operation yet. Four hundred thirty-nine billion in backlog and zero operating halls. Of course buyers want a discount. They even put OpenAI's CFO, Sarah Friar, and infrastructure head Sachin Katti on an investor call. Some investors read that as the company knowing it has a skepticism problem. It isn't only SB Energy. Holtec paused its IPO indefinitely, naming uncertainty of data center development as the primary reason. It had sought up to nine hundred million dollars at a valuation as high as ten billion. Aggreko has slowed its process too, per three people briefed. Watch Nscale. Bankers call its October offering the first test of how this market prices these deals now. And Anthropic, per the Times, is still on target for this fall. Different business, same buyers.
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Still on our list: DTE's acceptance letter in Lansing, what intervenors say about MISO's filing at FERC, and whether SB Energy ever sets a price range. Every source we quoted is linked in the show notes. The Data Center Daily is a Lantern Podcast, and we're back with you tomorrow.