Montanans ask PSC to rein in data-center energy agreements
Laura Lundquist
(Missoula Current) As tech startups are rushing to build large data centers across the nation, some Montana organizations are asking state energy regulators to require data centers to pay some of the costs instead of allowing NorthWestern Energy to give them a free pass.
On Monday, Earthjustice filed a complaint with the Montana Public Service Commission on behalf of nine organizations who are asking that a separate customer class be created that would require data centers to pay for costs associated with the energy they use instead of spreading the cost to residential customers.
The organizations are responding to NorthWestern Energy’s recent letters of intent to provide up to 1,400 megawatts of electricity to three data center developers in Montana. The three companies involved are Atlas Power Group, Sabey Data Center Properties, and Quantica Infrastructure. NorthWestern Energy’s existing customers use about 760 megawatts, so the three data centers could more than double the electrical demand.
A few years ago, NorthWestern was already claiming its existing energy sources were insufficient. So it proposed building a new natural-gas generating station and planned to charge NorthWestern customers for part of the construction cost. Now, to meet the huge demand of potential data centers, NorthWestern would need to upgrade its transmission system and would likely need new sources of electricity. These changes would result in more utility bill increases for existing customers.
Montana law requires electric utilities to prove that the addition of new large-load customers - those requiring more than 5 megawatts - won’t increase costs for existing ratepayers over the long term. However, NorthWestern informed the PSC in September that it wouldn’t reveal how existing customers would be affected even though NorthWestern plans on providing service to data centers as early as this January. NorthWestern also requested a protective order for its letters of intent with data centers after the PSC requested additional information.
“We’re very concerned that households will be forced to make decisions about their health based on electricity costs just so data centers can operate in Montana. We ask the commission to allow all ratepayers the opportunity to participate in decisions surrounding data centers so that we do not, ultimately, bear the burden of these energy hogs. Fairness and transparency cannot be too much to ask,” said Amy Cilimburg, Climate Smart Missoula executive director, in a statement.
The 2025 Montana Legislature lowered the property-tax rate for data centers to incentivize development at a time when residential property tax rates keep increasing. An additional three data centers have been proposed in Montana, and their additional energy requirements could cause the existing demand to quadruple.
However, Ardent Tech recently withdrew its proposal to build the TAC Data Center on 569 acres northeast of Great Falls after trying for four months to start development. In its search for electricity, Ardent Tech said it had discussions with several companies but that it could not proceed further without NorthWestern Energy’s cooperation. The TAC Data Center would have demanded 600 megawatts of electricity by 2030, approximately 88% of what Montana’s existing customers use.
The story of TAC Data Center is not uncommon. According to Utility Dive, an electrical business publication, 80% to 90% of proposed data centers in the U.S. interconnection queue will never be built, in part because they duplicate requests made in other utility territories.” Sometimes, companies that were merely speculating for cheap energy pull out after utilities have already planned for more power generation, increasing costs for the remaining customers.
“We have a long history of well-financed industries coming to Montana, exploiting our resources and our workers, and then leaving Montanans holding the bag,” said Derek Goldman, NW Energy Coalition policy and regulatory associate, in a statement. “The influx of data centers feels like another one of those boom and bust resource grabs, and our state regulators need to act now to ensure that Montana residents and energy customers are protected.”
If Montana did create a customer class for data centers, it wouldn’t be the first to do so. In Virginia this year, three utilities proposed new large-load rate classes that would apply to data centers. Dominion Energy and Appalachian Power would require data centers to pay at least 60% and 80% of contracted demand, insulating existing ratepayers, according to the Virginia Mercury. Member-owned Rappahannock Electric Cooperative’s proposal would require new data centers to put up collateral, cover some infrastructure upgrades, and pay up to 100% of contracted load to protect existing customers.
Missoula County created a similar requirement after a brush with a cryptocurrency mining company that grew to consume about one-third the amount of energy used by the entire city of Missoula. After the company folded in 2019, Missoula County adopted zoning that requires any cryptocurrency mining operation within the county to either purchase or develop enough new renewable energy to offset 100% of its electrical consumption.
That’s in keeping with a recent study by Data Center Watch that found that opposition to data centers is growing across the nation. At least 16 data center projects, worth a combined $64 billion, have been blocked or delayed by local opposition.
In districts where data centers have been built, about 55% of Republicans and 45% of Democrats have taken public positions against the developments, according to the study. And in Virginia, which once enabled data center development, data centers have become an intensifying issue in local politics due to higher costs, noise and the strain on local resources.
“The future looks like Virginia,” the study authors wrote, adding, “Virginia is now the focal point for community opposition to data centers in the United States, with 42 activist groups campaigning to slow, stop, or further regulate data center development.”
The organizations petitioning the PSC include Climate Smart Missoula, Big Sky 55+, Butte Watchdogs for Social and Environmental Justice, Golden Triangle Resource Council, Helena Interfaith Climate Advocates, Honor the Earth, Montana Environmental Information Center, Montana Public Interest Research Group, and NW Energy Coalition.
Contact reporter Laura Lundquist at lundquist@missoulacurrent.com.