TLDR
- Wisconsin’s Public Service Commission is requiring Oracle to post over $7 billion in collateral for its Port Washington data center
- The annual cost of the collateral requirement exceeds $100 million
- Oracle holds a BBB credit rating — two notches below the required A- threshold set by utility We Energies
- The data center is central to Oracle’s $300 billion computing supply contract with OpenAI
- Oracle has asked a county judge to remove the rule, but the regulator declined to reconsider
Oracle (ORCL) stock dropped 3.98% to $121.38 after the Financial Times reported Wisconsin’s power regulator upheld a collateral requirement that could cost the company more than $7 billion.
The Public Service Commission of Wisconsin declined to revisit rules tied to utility We Energies that require Oracle to post a $7 billion letter of security. The annual cost of that requirement tops $100 million.
The rule is part of We Energies’ tariff for very large customers. Any data center developer with an S&P credit rating below A- must post collateral based on the value of power plants and transmission lines built to serve it.
Oracle’s rating at the time was BBB — two notches short of the threshold.
Why This Matters for Oracle’s AI Plans
The data center in question is a nearly one-gigawatt facility in Port Washington, Wisconsin. It is a key piece of Oracle’s $300 billion contract with OpenAI to supply computing power.
The added financing burden piles onto existing pressures the company faces around its AI buildout, including rising debt and fast-moving capital spending.
Oracle asked a county judge last month to strike down the rule and allow We Energies to waive the requirement. The company argued the rules could impose heavy financing costs and discourage future investment in the state.
The regulator’s representative told the FT it declined to act on that petition.
Where Things Stand
Oracle told the FT it remains hopeful the commission will reconsider after weighing the job creation and economic impact of the $15 billion project.
On the valuation side, GuruFocus puts Oracle’s GF Value at $186.76 — roughly 35% above the current trading price of $121.38. The company’s P/E (TTM) sits at 20.82x, well below its five-year median of 32.3x.
Insider activity over the last three months showed $63.7 million in stock sold with no recorded purchases.
The regulator has not indicated any timeline for further review of Oracle’s petition.
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