Chelan PUD approves power contract for Microsoft Data Center in Malaga

WENATCHEE — Chelan County Public Utility District commissioners on Monday, June 16, approved a contract to supply power to Microsoft’s forthcoming data center campus in Malaga, marking the first agreement executed under the utility’s large-load framework.

The contract, designed to protect reliability and preserve low rates for current customers, includes provisions to ensure Microsoft bears the full cost and risk associated with its high energy demand.

“Chelan PUD has a long history of managing local hydropower in the best interest of customer-owners,” said General Manager Kirk Hudson. “We’re continuing that legacy by preserving what’s most important to our customer-owners — reliability and low rates.”

Microsoft is scheduled to begin commissioning the new data center in August. Through the end of 2025, Chelan PUD will provide up to 18 megawatts of surplus hydropower at market-based pricing. From 2026 through 2040, the energy source will be determined under terms that align with the utility’s energy marketing strategy and regulatory requirements.

The large-load framework outlines three options for supplying energy: short-term market purchases, customer-sourced wholesale energy, and negotiated contracts at the board’s discretion. All energy delivered under this framework must meet carbon-free, renewable, and capacity requirements set by Chelan PUD and applicable laws.

“We’re proud of the contract that’s before the commission now. It makes good on our commitment to pay our own way for the energy that’s required to power our data centers,” said Irene Plenefisch, Senior Director of Government Affairs at Microsoft. “Under the large load contract, we will receive energy from a third-party supplier. That means we will be bringing in new, clean power from outside the region.”

Microsoft has already paid for infrastructure upgrades needed to support the data center, including the $86.5 million construction of the Jumpoff Ridge substation.

Chelan PUD’s large-load designation applies to industries with significant energy demands, such as data centers and manufacturing facilities. In response to customer feedback, the PUD developed a standardized contract template ensuring large-load customers are solely responsible for the financial and operational impact of their power usage.

In additional action Monday, commissioners approved a lease agreement with Helion One, LLC, for 80 acres on Chelan PUD’s Rock Island Dam property in Malaga. The agreement includes terms for land improvements, water rights, decommissioning responsibilities, and gives Chelan PUD preferential access to purchase any surplus power generated on site. Full site development is contingent on regulatory approval and future agreements related to power supply and transmission.