There's now an agreement to let a new Microsoft data center connect with Chelan PUD power lines.

PUD commissioners approved the Interconnection Agreement this week for the large data center planned to occupy 102.5 acres along the Malaga-Alcoa Highway.

The agreement does not specify the source of the power or how much will be provided, just that connection will come through PUD lines.

Microsoft can still choose to buy its power from the PUD or a third-party source, or a combination of the two.

The company and the PUD will negotiate how much power the utility will provide at a later date, when Microsoft needs the power.

The rate would be on a "large load" schedule, which is higher than what typical PUD customers pay.

The resolution passed by commissioners calls for an increase in the PUD budget of $86.5 million, with about 10 percent to be spent this year, and the rest to be used over the following three years (2023-2025).

Microsoft will not be billed by the month to establish connectivity, but will pay upfront in two installments, so that the PUD can start construction on infrastructure without having to use its own money.

The agreement also has "not to exceed" amounts and check ins to make sure money is not being spent ahead of schedule.

PUD Attorney Robb Davis complimented Microsoft on its handling of negotiations.

"In my 10 years of electric utility experience, this has been really one of the smoothest transactions I've been part of," said Davis. "Really thoughtful deliberations, Good conversations. Both sides focused on how to get the contract to a place that works for both sides without trying to score a win in a roundabout way."

Microsoft Director of Energy Markets Emily Watt said the company was not looking for special treatment or a favorable deal.

"Our key focus is to not shift costs to other Chelan customers," said Watt. “We believe that your customers are Microsoft customers, as well, and we certainly don’t want them not to buy Windows products or service products because they’re upset with us.

"We are excited to be in the community, to continue growing in central Washington, which is our home state and looking forward to lots and lots of continuously smooth partnerships.”

Microsoft is getting the Malaga site for its data center through a purchase and sale agreement with the Chelan Douglas Regional Port Authority for a cost of roughly $9 million.