Milwaukee's natural gas capacity is being rebuilt around new demand

By Sam Strong, Vice President of Business Development, Discovery Energy. Technical review by Tara Dugger, Chief Operating Officer. Updated October 2026.

Metro used: the Milwaukee-Waukesha, WI metropolitan statistical area (CBSA 33340), as delineated in OMB Bulletin No. 23-01 (July 21, 2023): Milwaukee, Ozaukee, Washington and Waukesha counties. The utility records on this page cover the gas system serving Milwaukee of Wisconsin Electric Power Company, which does business as We Energies; items are classified inside or outside the four counties using the place names in the filings, and items outside are shown as system context.¹

Key takeaways

What happened in Milwaukee during Winter Storm Elliott?

On December 23, 2022, We Energies reported that an interstate pipeline supplier had suffered a significant equipment failure, cutting the gas it normally delivers by 30 percent. With extreme cold across much of the country, the utility said it could not receive additional gas from its other pipeline suppliers. It drew on stored liquefied natural gas and propane, reduced gas to business customers who had agreed to special billing for such events, and asked customers to lower thermostats.²

The next day, We Energies named the Guardian pipeline as the supplier, reported that deliveries had recovered, and lifted the conservation request. No customer lost the ability to heat their home. The business reductions had already happened, though, and the utility's notices do not identify which businesses were affected or what the reductions cost them.²

The 30 percent figure applies to one supplier's deliveries, not to Milwaukee's total supply, and the event was a temporary upstream failure rather than proof that local pipes are too small. Its significance is what it revealed: on the coldest days, there was no spare pipeline capacity to call on. The Guardian pipeline's Bluff Creek gate is listed in the utility's tariff as a city gate of the Lakeshore system that includes the city of Milwaukee.²

Has Milwaukee had other gas supply problems since 2020?

Since 2020, Winter Storm Elliott is the only winter event in which a natural gas reduction in Wisconsin is documented. Other cold events show up mainly as price spikes at the Chicago hub, which is context, not a Milwaukee delivery problem.²

• February 2021, Winter Storm Uri. No We Energies curtailment was reported.
• December 2022, Winter Storm Elliott. The Guardian pipeline failure and business gas reductions described above.
• January 2024. No Wisconsin gas interruption was reported.
• February 2025. No Wisconsin gas interruption was reported.
• January 2026. We Energies reported that it used storage and its new LNG facilities to keep supply steady during the January cold. No Wisconsin gas interruption was reported.

How much spare gas capacity does Milwaukee have?

Little room on the existing system

In its application for new capacity, the utility stated that interstate pipeline capacity into its system is fully subscribed and that, without additional supply, it would not have enough to meet firm demand starting in winter 2027. State regulatory staff, analyzing the utility's 2023 and 2024 gas supply plans, found reserve margins of 5 percent or less and found a significant need for additional capacity.³

Demand growth driven by power plants

The Commission accepted a firm deliverability requirement of 1,058,474 dekatherms per day for the Lakeshore Western area in winter 2027-2028, including a planned conversion of the Elm Road generating station. About 94 percent of the expected demand growth was associated with electric generation, and about 6 percent with all other firm gas customers. Intervenors argued the forecast was uncertain or speculative; the Commission accepted it, and required notice and mitigation if the generation conversion or demand changes.³

The response: Oak Creek LNG

On September 29, 2025, the Commission approved the Oak Creek LNG storage facility at a construction cost of $456.3 million, excluding financing allowances, subject to conditions. The decision does not mention Winter Storm Elliott. It is a capacity investment for forecast growth, not a repair for the 2022 failure, although LNG storage would also supply gas during a future pipeline disruption. The utility reported the project 33 percent complete in the second quarter of 2026, with service planned for December 2027.³¹⁰

How the Milwaukee capacity picture has changed, and the next report to watch.¹⁰

What is driving new natural gas demand in the Milwaukee area?

The Commission's separate approval of the Oak Creek combustion turbines (five units of 220 megawatts, 1,100 megawatts in all) found them necessary to meet the requirements of one customer, which it calls the Very Large Customer. The order describes the expected demand as a large data center being built in Mount Pleasant, and the utility's testimony, as summarized by the Commission, names Microsoft. Oak Creek LNG is designed to supply peak-day gas for the utility's existing and proposed gas-fired generation, including those turbines.⁸

The link therefore runs through the power plants. The Oak Creek LNG decision itself never mentions data centers, and no filing reviewed says how much of the generation-driven gas need comes from the data center. Intervenors argued the load was speculative; the utility reports the first phase of the Microsoft campus operating since April 2026.⁸

Official records beyond the utility's gas filings show these gas-fired projects, classified against the four counties:¹¹

New gas-fired projects in official records, with place classification and status as stated in each record.¹¹

EIA's September 2026 generator inventory lists planned natural gas-fired generators in the four counties only at South Oak Creek, and a search of FERC notices since January 2025 found none naming those counties with a natural gas pipeline docket.¹¹

How large is the new demand?

Milwaukee-area new demand compared with gas capacity (illustrative, at full output).⁴

If run flat out, the new turbines alone would burn gas equal to about 44 percent of the posted operating capacity at one delivery point: Guardian Pipeline's Bluff Creek point into the Milwaukee-area system, which can take 589,360 MMBtu a day. That is one point on one pipeline, not the total pipeline capacity serving Milwaukee. Measured against the data center alone, generating Microsoft's phase 1 load of 450 MW with these turbines would take about 106,164 MMBtu of gas a day, about 18 percent of the posted capacity at Guardian's Bluff Creek delivery point. Microsoft has said publicly that both phases together could use about 900 MW, a figure that does not appear in the regulatory filings reviewed; at that level the gas equivalent would be about 212,328 MMBtu a day, about 36 percent of the posted capacity at Guardian's Bluff Creek delivery point. Timing matters, though: the turbines are scheduled for service in August 2028, after the gas need the Commission accepted for winter 2027-2028 begins, and that earlier need includes the planned conversion of the Elm Road generating station. The data center's gas demand therefore arrives from late 2028 onward.⁴⁵

How full was the main pipeline into Milwaukee last winter?

Guardian Pipeline publishes the capacity it has available and the gas scheduled at each delivery point. For its Bluff Creek point, which the utility's tariff lists as a gate to the Lakeshore system serving Milwaukee, we compared scheduled gas with operating capacity for 90 gas days from December 1, 2025 to February 28, 2026.⁵

Guardian Pipeline, Bluff Creek delivery point, winter 2025-2026.⁵

Last winter, gas scheduled through this delivery point stayed well below its posted capacity. The capacity pressure documented in Milwaukee is about extreme peak days, the loss of a supplier as in December 2022, and demand the regulator expects from winter 2027-2028, not routine congestion today.⁵

What would a repeat of December 2022 face today?

• Pressure: one supplier fails. In December 2022 the Guardian pipeline cut its deliveries by 30 percent, and in extreme cold the utility could not get extra gas from its other pipelines.²
• Cushion: storage and a record of coping. 2 Bcf of LNG storage has been in service since 2023 and 2024 at Bluff Creek and Ixonia; in 2022, home heating was maintained.²
• Pressure: new generation demand. The 1,100 MW of Oak Creek turbines are under construction and planned to enter service in August 2028; none is expected to run this winter. The regulator's accepted gas need begins in winter 2027-2028.⁸
• Cushion: new LNG. Oak Creek LNG is planned for December 2027, with a design sendout of 300,000 Dth per day (33 percent complete in the second quarter of 2026).³
• Pressure: cold-weather production losses. Federal staff found that U.S. Lower 48 gas production fell 28 percent in February 2021, during Winter Storm Uri.¹²
• Cushion: headroom at one gate. Last winter, gas scheduled through Guardian's Bluff Creek delivery point had a median of 33 percent of its posted capacity.⁵

Interruptible business customers are first in line in an event like this, so service terms are worth checking now.

Who gets gas first in a shortage?

The order is set in the utility's gas tariff, not in the Oak Creek approvals. In a supply shortage, the tariff's interruption sequence names interruptible sales customers (classes Ig-4 to Ig-7) and special-contract customers, who are interrupted under their contract terms; interruptible customers can be interrupted even when no constraint day has been declared. A separate eight-category priority list puts residential use first, but it governs new and additional gas requests, not the order for cutting existing customers. That sequence does not name firm commercial customers or power generators, and the parts of the state's gas service rules (chapter PSC 134) reviewed contain no curtailment order for customer classes.⁷

How the Oak Creek turbines will be supplied is only partly documented. The utility told regulators the new gas-fired plants would take firm service, and its application targets about 240,000 MMBtu a day of firm supply, which it says is not yet available at the site; it also says interruptible pipeline capacity will be used when firm service is not available. The tariff offers power generators both interruptible and nominated firm service, and the pending rate case proposes new classes of each for the Oak Creek turbines, so the class is not decided. No order reviewed says whether the data center's electric service can be curtailed.⁷⁸

What does this mean for business gas costs?

Who pays is being decided now

The Commission left recovery of Oak Creek's costs, and how they are divided among customer classes, to a future rate case. A construction approval is not a customer charge, and the $456.3 million cannot be divided by customer count or gas volume to estimate an industrial surcharge. Because the need is driven mainly by power generation, how costs are allocated between generation and other firm customers will matter to manufacturers.³

That rate case is under way. In We Energies' current rate case (docket 5-UR-112 of the Commission), filed jointly by We Energies and Wisconsin Gas LLC, the utility has proposed assigning the costs of Oak Creek LNG, the Rochester Lateral and other new gas infrastructure to its electric generation customer classes, the power plants that drive the new need. Microsoft has opposed that proposal, seeking a revised cost-of-service study for all gas customers or its own modified version. Related proposals would move peak-day pipeline and storage costs from the shared gas cost pool onto generators, and Commission staff support requiring a filing on the feasibility of transportation rates for generators before February 2027.⁶

Commission staff prepared a decision matrix in October 2026 setting out these options for the commissioners, who had not yet voted as of that month. An industrial customer group is also a party to the case. We Energies expects new rates in January 2027.⁶

Past capacity-cost allocation

The utility's last decided gas rate case (docket 5-UR-111, December 2024) offers history rather than a forecast for Oak Creek. The Commission approved class revenue allocations using several cost-of-service studies, over the industrial group's argument that this would shift costs from residential customers to larger transportation customers. The order text does not say how pipeline capacity or storage costs were divided among industrial classes. Its rate appendix does show gas cost components that differ by service type, for example a peak demand component for firm residential sales and none for interruptible sales.⁶

Service terms matter before rates change

The utility's tariff offers commercial and industrial customers firm sales service, firm transportation service, and interruptible sales service with firm distribution capacity. Firm distribution capacity does not make an interruptible gas supply firm. Under the utility's tariff, using gas after an interruption notice can trigger penalties beginning at $2.50 per therm plus incremental costs. No penalties tied to the December 2022 event have been reported; the exposure is contractual.⁷

Winter and market context

Context only, as of October 2026. It does not set the outlook level and makes no prediction of outages. Its sources are listed separately under Market and weather sources and are refreshed on the publication date.

NOAA's Climate Prediction Center said on October 15, 2026 that its November 2026 to January 2027 outlook gives the highest odds of warmer than normal conditions to Southeast Alaska, the upper Mississippi Valley and the Great Lakes, a discussion that names regions and not counties.^A1 The U.S. Energy Information Administration said on October 6, 2026 that it expects U.S. natural gas inventories to enter the winter heating season 2% above the previous five-year average,^A2 and its October 2026 Short-Term Energy Outlook says prolonged periods of cold weather could increase withdrawals beyond its forecast.^A3 These are national and regional facts, not statements about We Energies' system, and none of them is used to set the outlook on this page.

What is the outlook for Milwaukee gas capacity through 2029?

Discovery Energy rates the outlook for Milwaukee-area natural gas capacity through 2029 as Watch (confidence: Medium): the Commission accepted a need for more firm gas delivery from winter 2027-2028, with staff reserve margins of 5 percent or less, and approved Oak Creek LNG, planned for December 2027, to meet it, so demand and supply are planned to arrive almost together.³¹⁰ Documented risk factors: a recent supply event (F3), since in December 2022 a Guardian pipeline equipment failure cut that supplier's deliveries by 30 percent and We Energies reduced gas to business customers with special billing agreements and asked customers to lower thermostats; one factor does not raise the base level.²⁹ Three developments would change the assessment: an Oak Creek LNG delay beyond winter 2027-2028 that leaves demand ahead of usable supply, including whatever the utility's third quarter 2026 progress report, not yet filed, and later reports show; faster or slower generation load, including the Elm Road conversion (docket 5-CE-161, pending) proceeding without the facility or being cancelled; evidence of a shortfall affecting firm customers other than generators.

Outlook levels, from least to most concern: Stable, Watch, Elevated, High, Severe. Levels describe the public record of capacity and supply risk; confidence is reported separately. They are qualitative assessments, not forecasts of outages.

What should Milwaukee-area manufacturers check now?

• Tariffs and charges, through a utility audit. Confirm each account is on the right rate class and tariff, and that riders, demand charges and capacity-related charges are billed correctly. Over 70% of the clients Discovery Energy has audited were billed incorrectly. An audit verifies tariffs and charges and recovers overcharges before winter costs rise.
• Your actual service election. Confirm whether each account is firm or interruptible, and what that means for supply versus distribution.
• Interruption and penalty terms. Know the notice requirements, unauthorized-use charges and balancing obligations before the next cold-weather event.
• Backup arrangements. Check whether alternate fuel or curtailment plans are feasible and current.
• The rate case and future cost allocation. Track how capacity costs, including Oak Creek, are assigned to industrial classes.

Frequently asked questions

Related case studies

Discovery Energy publishes gas capacity case studies for other metros, using the same method and outlook scale.

• Detroit natural gas capacity case study (outlook: High)
• Boise natural gas capacity case study (outlook: Watch)
• South-central Pennsylvania natural gas capacity case study (outlook: Elevated)
• York natural gas capacity case study (outlook: Elevated)

Notes

1. Scope and boundary: We Energies' natural gas system serving Milwaukee (Wisconsin Electric Power Company's gas operations), January 2020 through October 2026. Metro: Milwaukee-Waukesha, WI MSA per OMB Bulletin No. 23-01, delineation file (title, date and county list confirmed by code). Place classifications for the projects table are in mke_metro_classification.csv; the county of Mount Pleasant was assigned manually. It does not identify losses at any named business.
2. Timeline sources: We Energies news releases, the U.S. Energy Information Administration's weekly natural gas reports for heating-season weeks, and Public Service Commission of Wisconsin records. The absence of a reported interruption does not prove that none occurred. We Energies customer notices of December 23 and 24, 2022. ↩
3. Final Decision, docket 6630-CG-140 (Oak Creek LNG), September 29, 2025, including staff analysis of reserve margins and the accepted firm deliverability requirement; storage volume measures how much gas is held, not how much can be delivered in a day. ↩
4. Full-output figures are illustrative, not a forecast; the Commission's modeling assumed the turbines would run at no more than a 20 percent annual capacity factor. The turbines serve the whole electric system, not one customer, the 450 MW figure is from the Commission's order, and the 900 MW figure is from Microsoft's public statements as reported in the news; the data-center comparisons show the gas these turbines would need to generate that much electricity, not how the campus is actually supplied. Oak Creek LNG's 2 Bcf is a planned facility, separate from the 2 Bcf already in service at Bluff Creek and Ixonia. ↩
5. Pipeline postings: based on 446 postings covering all 90 gas days; Guardian's public postings begin November 2, 2025, so earlier winters cannot be compared. The figures are scheduled volumes at one delivery point on one pipeline, not physical flows across the whole system, and they do not address the need projected for winter 2027-2028. ↩
6. Rate cases: Commission docket 5-UR-112 filings listing and draft decision matrix prepared by Commission staff, October 2026 (issues 90 to 109); docket 5-UR-111 Final Decision, December 19, 2024. Staff and party positions are as reported, not Commission decisions. ↩
7. Tariff and rules: Wisconsin Electric Power Company gas tariff, Volume XVI, schedules X-111, X-170, X-215, X-245, X-250, X-255, X-415 and X-425; Wisconsin Administrative Code chapter PSC 134 (official page; section text partly unavailable). ↩
8. Oak Creek turbines: Final Decision, docket 6630-CE-317, July 2, 2025; CPCN application, rebuttal testimony and the quarterly progress report for the second quarter of 2026; Commission Final Decision in docket 6630-TE-113 (Very Large Customer tariff), May 21, 2026; WEC Energy Group investor presentation, August 2026. ↩
9. Risk factors, Outlook Scale v2.3: F3 is counted (note 2). Not counted: F1, because no filing states Guardian's share of the design day or design hour; F2, because no key contract ending in the window is documented; F4, because the Oak Creek turbines are scheduled for August 2028 and EIA lists February 2028, both after Oak Creek LNG in December 2027, and the Elm Road conversion and Port Washington projects carry no service date or are upgrades; F5, because the fully subscribed statement describes the system need that sets the base level and no gate station inside the four counties is named as limited by an upstream pipeline; F6 and F7, not documented. Base level timing: the accepted need begins "in the winter of 2027" with no month given, and the facility is planned for December 2027, so whether the fix arrives before the need date cannot be determined from sourced dates; Watch is kept until a later report or order settles it. ↩
10. Oak Creek LNG progress reports: the Commission's listing for docket 6630-CG-140, retrieved October 25, 2026, shows reports for the fourth quarter of 2025 and the first and second quarters of 2026, the latest filed July 27, 2026; no third quarter 2026 report is listed (the first and second quarter reports were filed on the 27th of the month after quarter end). The second quarter report is the source of the December 2027 in-service date and 33 percent completion. ↩
11. R3 (expanded) search, October 2026: EIA-860M September 2026 Planned sheet filtered by county and Federal Register FERC notices since January 2025 searched by county for pipeline (CP) dockets, both computed by code; Wisconsin DNR air permit hearing notices (Port Washington permit 25-MIN-093, hearing June 2026; Oak Creek permit 26-MIN-058, hearing September 2026); Commission dockets 5-CE-161 (Elm Road gas fuel flexibility; applicants' transmittal letter and the Commission's filings listing) and the Citizens Utility Board's May 2026 request for contested case hearings in docket 5-CE-161 and four other generation dockets. Not established by code: MISO interconnection queue entries and the DNR permit decisions; the Foundry Ridge project (Walworth County, outside the four counties) is not shown. News is leads only and none is used. ↩
12. Federal staff, FERC, NERC and Regional Entity, The February 2021 Cold Weather Outages in Texas and the South Central United States (November 2021). ↩

Market and weather sources

Official public sources retrieved October 25, 2026. They are separate from the record notes above.

1. A1. NOAA Climate Prediction Center, Prognostic Discussion for Long-Lead Seasonal Outlooks, October 15, 2026. Link ↩
2. A2. U.S. Energy Information Administration, press release, "EIA expects a mixed picture for winter fuel costs this year," October 6, 2026. Link ↩
3. A3. U.S. Energy Information Administration, Short-Term Energy Outlook, October 2026. Link ↩

Sources

1. We Energies, customer notice on interstate pipeline supply reduction and conservation request, December 23, 2022, and update identifying the Guardian pipeline and lifting the conservation request, December 24, 2022.
2. Public Service Commission of Wisconsin, Final Decision, docket 6630-CG-140 (Oak Creek LNG), signed September 29, 2025, including staff analysis of reserve margins and the accepted firm deliverability requirement; staff Environmental Assessment, December 2024; Oak Creek LNG quarterly progress reports, fourth quarter 2025 to second quarter 2026, and the Commission's filings listing retrieved October 25, 2026.
3. Wisconsin Electric Power Company, gas operations tariff: service classification index and sheets X-215, X-415 and X-425; Volume XVI schedules X-111, X-170, X-245, X-250 and X-255.
4. WEC Energy Group, investor presentations, March 2024 (Bluff Creek and Ixonia LNG facilities) and August 2026 (Microsoft Mount Pleasant campus status); We Energies news releases, February 5 and March 5, 2026.
5. Public Service Commission of Wisconsin, docket 5-UR-112 filings listing and draft decision matrix prepared by Commission staff, October 2026; docket 5-UR-111, Final Decision, December 19, 2024; We Energies rate review announcement, April 2026.
6. Public Service Commission of Wisconsin, Final Decision, docket 6630-CE-317 (Oak Creek combustion turbines), July 2, 2025, with the CPCN application, applicant rebuttal testimony and exhibit; Final Decision, docket 6630-TE-113 (Very Large Customer tariff), May 21, 2026.
7. Public Service Commission of Wisconsin, docket 5-CE-161 (Elm Road Generating Station gas fuel flexibility): applicants' transmittal letter, October 20, 2025, and filings listing; Citizens Utility Board of Wisconsin, request for contested case hearings, May 29, 2026.
8. Wisconsin Department of Natural Resources, public notices of air pollution control permit application reviews for the Port Washington Generating Station and the Oak Creek Power Plant, 2026; U.S. Energy Information Administration, EIA-860M Preliminary Monthly Electric Generator Inventory, September 2026, and Federal Register notices of the Federal Energy Regulatory Commission searched by county.
9. Office of Management and Budget, OMB Bulletin No. 23-01, July 21, 2023.
10. Guardian Pipeline, L.L.C. (DT Midstream), public Operationally Available Capacity postings, gas days December 1, 2025 to February 28, 2026.
11. U.S. Energy Information Administration, Natural Gas Weekly Update issues (February 2021, February 2022, December 2022, January 2024, February 2025) and monthly Wisconsin citygate and Henry Hub price tables.
12. FERC, NERC and Regional Entity staff, The February 2021 Cold Weather Outages in Texas and the South Central United States (November 2021).
13. Wisconsin Administrative Code, chapter PSC 134, Standards for Gas Service (official page, retrieved October 15, 2026; section text partly unavailable).

Figures are as reported in the sources above, as of October 2026. Requested amounts, approved amounts and customer charges are kept separate; no customer charge for Oak Creek LNG or for the December 2022 event had been set as of October 2026.