Microsoft signs 20-year power deal for its Indiana AI campus, and says it will pay the bill

When a giant data centre moves into town, the families nearby often ask one plain question: will my electricity bill go up? In northwest Indiana, the local utility now says it shouldn’t, because Microsoft will pay for the new power its AI campus needs. NiSource announced the 20-year agreement on Friday, 16 October.

The Microsoft NiSource deal matters well beyond one Indiana county. AI is pushing tech companies to find power at a speed grids were not built for. Who pays for the new plants is becoming one of the biggest questions in the industry, and this deal offers one public answer.

About 1,100 MW, from 2028, for the La Porte campus

Here is what NiSource’s release, as carried by Business Wire, says. Microsoft will start taking electric service in 2028, under a 20-year term. The deal adds about 1,100 megawatts (MW) of new generation to NiSource Generation Company, or GenCo, a NiSource unit set up to serve data centres.

The power is for Microsoft’s previously announced campus in northwest Indiana. Local reports, including Inside Indiana Business and the NWI Times, place it in La Porte. Indiana’s economic development agency first announced the La Porte data center in 2024 as a US$1 billion project.

How much power does an AI data centre use? For scale, a US Congressional Research Service report puts 1,000 MW at roughly the demand of 800,000 American homes. In plain terms, this one campus could need as much power as hundreds of thousands of homes.

NiSource says Microsoft fully funds all generation and transmission needed for its load, so existing customers of NIPSCO, its Indiana utility, don’t carry those costs. It also projects that savings for NIPSCO electric customers from its data-centre contracts rise from US$1.4 billion to about US$1.75 billion. That is as much as US$140 per customer a year, according to the release.

Separately, GenCo has contracted 600 MW of battery storage under a long-term agreement, to be built by an affiliate of AGP Group. The price of the Microsoft contract was not disclosed. NiSource shares rose about 2 to 3% on the day, according to market reports including Investing.com and StreetInsider.

The missing details: what kind of power, and who signs off

NiSource has not said what kind of plants will make up the 1,100 MW. The release says only “generation resources”. For context, the generation GenCo already has approval to build for data centres is mainly gas, plus batteries. That matters because Microsoft has a goal of being carbon negative by 2030.

It is also not yet clear whether this contract needs approval from Indiana’s utility regulator, the IURC. Earlier deals with Amazon and Alphabet went before the commission. NiSource says it will share more on its earnings call on 28 October.

Microsoft’s own voice comes only through NiSource’s release. In it, Jeff Riles, Microsoft’s senior director of energy markets, said the company “has always been committed to paying our own way”. That echoes a pledge Microsoft made in January to pay its full power costs where it builds.

If you live near a data centre, here is what to watch

Do data centers raise electricity bills? The evidence so far is mixed. A Rutgers study of 24 US states found no clear rise in local household bills from 2014 to 2024, but warned that big new projects could change that.

For NIPSCO customers, the promised savings are projections over many years, not cash in hand. For readers anywhere else, look for rules often called “large-load tariffs”. A growing number of US states have approved them. They make big new users pay their own grid costs. If a data centre is planned near you, ask your utility or regulator whether one applies.

The Microsoft NiSource deal is a fair model on paper, still awaiting proof

There is real good here. Microsoft is the third big cloud company (often called a hyperscaler), after Amazon and Alphabet, to sign with this utility, and the “big customer pays” rule is stated openly in the deal. That kind of clarity helps families and local leaders plan.

The open questions are just as fair. Savings that stretch over 20 years depend on AI demand holding up (strong for now, as TSMC’s record quarter shows), and on the numbers surviving review by consumer advocates. Leaving the fuel type unsaid also leaves the climate cost unclear.

On balance, this looks like a careful step in the right direction, not a finished answer. The test comes when the plants are built and the first bills arrive.

What to watch: NiSource’s 28 October call, the fuel behind the 1,100 MW, and whether Indiana’s regulator weighs in.