Viewpoint: Data center boom leaves Montana at energy crossroads

Max Scheder-Bieschin

Data centers can bring real benefits to a community. They can create construction and technical jobs and attract supporting businesses—from fiber infrastructure to maintenance and cooling services. When structured thoughtfully, they can diversify Montana’s economy with long-term private investment.

That said, across the country, data centers are driving electricity demand and putting pressure on local grids. Developers often promise they will “pay their own way” and even bolster grid flexibility, but real-world results are varied. In some jurisdictions, consumers have seen sharp rate hikes or subsidized infrastructure costs hidden behind complex contracts.

The challenge is clear: capture data-center investment without imposing hidden burdens on everyday Montanans.

The state must ensure that electricity rates remain stable and reliable. That will require our lawmakers to put firm guardrails in place, and they need to do so immediately.

In northern Virginia, home to the largest concentration of data centers in the world, the legislature predicts that the average residential electricity bills will increase by up to $37 per month as utilities expanded infrastructure to meet data-center demand. In the 13-state PJM Interconnection region, capacity auction prices rose 82 percent in 2024, a spike analysts tied directly to new data-center load and reliability pressures. Those increases flow through to consumers and small businesses—exactly the outcome Montana must work to prevent.

Montanans have ample opportunity to learn from others—and we must if we want affordable energy and good outcomes. In Loudoun County, Virginia, regulators required that infrastructure upgrades tied to data centers be funded by the data-center customers—not spread across all ratepayers. In Chelan County, Washington, Microsoft struck a deal whereby it paid $86.5 million up front to build infrastructure improvements that were needed to serve the data center. This enabled the local utility to commit to using surplus hydro capacity and solid long-term contracts to absorb large data loads without raising rates.

These examples show that when planners insist on transparency, accountability, and contracts, new industrial demand need not harm existing consumers. Montana can adopt these lessons.

How we power new data centers matters. Montana and NorthWestern Energy still rely substantially on the Colstrip coal plant. Adding large new power loads could push the utility toward deeper coal reliance. Yet coal is increasingly expensive to operate. According to NorthWestern’s own 2023 data reported to the PSC, coal from the fully depreciated Colstrip plant costs $62.23/Mwh. Solar + storage systems across the US are at these costs and lower today and coming down quickly.

The point here is not to debate exact figures; rather, it is to emphasize that renewable energy is a less expensive yet viable option in Montana. States like Texas, which embrace the market economy, have been adding renewable energy to their system since George W. Bush was Governor.

Requiring data centers to bring their own renewable energy generation in exchange for the option to sell excess power back to the grid (which could lower costs for others), could ensure new industrial growth builds clean capacity instead of reinforcing fossil dependence.

Montana already generates more than half its electricity from renewables. While the bulk of Montana’s renewable energy comes from hydro power built last century, the state ranks among the top nationally for wind potential—estimated near 679,000 MW—and projects like the Rim Rock Wind Farm near Cut Bank (189 MW) prove large-scale renewables work here. Sunshine and geothermal potential add further upside.

By demanding transparency, cost accountability, enforceable contracts, phased growth, and renewable commitments, Montana can attract high-value industries while protecting ratepayers. Done right, the state can show that welcoming the digital future doesn’t have to mean higher bills or higher carbon—it can mean smarter energy and shared prosperity. Failing to do so will leave Montanans paying ever increasing power bills to subsidize the technology industry. We should do better by Montanans.

Please let your Public Service Commissioners hear from you. You can call them at 406-444-6199 or email them (maybe a copy of this article) at pschelp@mt.gov.