NorthWestern Energy files data center tariff proposal
Keila Szpaller
(Daily Montanan) NorthWestern Energy announced it filed an application requesting approval of its terms for serving data centers — a “Large New Load Tariff.”
The utility filed the application this week with the Montana Public Service Commission, which has been anticipating the proposal.
In an email, PSC spokesperson Jamey Petersen said the Commission has already indicated that under state law, a utility can’t serve a large load customer, such as a data center, “before a determination by the Commission that service to that customer will not adversely impact other customers over the long term.
“Without prejudging the merits of NorthWestern’s application, the Commission will be considering how the proposed tariff implements statutory requirements.”
Data centers are controversial in Montana and beyond.
Proponents argue they support economic development and a wider tax base, but detractors have raised concerns about significant water use (for cooling) and fear they will mean higher power bills for other customers.
The Montana Environmental Information Center, a conservation watchdog, said it will intervene in the docket to argue for a final tariff that gives the PSC more control and the public more transparency.
The Public Service Commission regulates monopoly utilities in Montana, including NorthWestern Energy, and public outcry has been loud against data centers.
State law requires power customers with a demand for 5 megawatts or more a month to show they won’t adversely impact a public utility’s other customers over the long term “as determined by the Commission.”
The tariff proposal from NorthWestern would not require the Public Service Commission to approve individual customer contracts with loads from 5 megawatts to 49 megawatts; “the tariff’s standardized process and mandatory protections apply,” the utility said.
For reference, a recently released data center proposal for Bonner is to start with a 3 megawatt facility, according to the Missoulian. The largest data centers can use 20-100 megawatts and more.
In a news release, NorthWestern Energy said its application creates a framework governing agreements between itself and new large-load customers, and it’s meant to address the costs and operational considerations associated with serving those loads while protecting existing customers.
“Our responsibility is to serve new opportunities in a way that protects our existing customers and strengthens Montana’s energy future,” said NorthWestern Energy CEO Brian Bird in a statement. “This proposal reflects Montana values — fairness, accountability, and thoughtful growth — while positioning our state to compete for high-quality economic development.”
The news release outlined minimum service commitment periods, termination if a data center ends a contract early, minimum energy billing requirements, collateral requirements, and more.
“These provisions are intended to ensure that customers taking large new loads are responsible for the costs associated with serving those loads and that existing customers do not subsidize these large new load customers,” NorthWestern said in the news release.
Anne Hedges, with the Montana Environmental Information Center, said in addition to approving a tariff, the PSC should approve a new rate class that’s specific to data centers, like it has for residential or industrial customers.
As for the tariff application, Hedges said the MEIC will argue for changes including more PSC oversight for data center proposals and more transparency to confirm existing customers aren’t subsidizing their costs.
“It looks like NorthWestern is putting itself in the driver’s seat,” Hedges said.
For example, she said, the proposal would not require any public participation for any data center under 50 megawatts. She said it also means NorthWestern can execute an agreement with a data center of that size before ever going to the PSC.
She said the tariff proposal also creates an artificial threshold for which data centers need review. For example, it doesn’t state what happens if there are 20 proposed 49-megawatt data centers, Hedges said. (Essentially, she said, NorthWestern’s proposal says “don’t worry about anything under 50 megawatts no matter how many there are.”)
Also, Hedges said, if a data center of more than 50 megawatts is found by the PSC to be insufficient, the tariff proposal doesn’t require the proposal to return to the PSC for approval.
“This is a wish list from the utility that allows them to set all the terms,” Hedges said.
In an earlier filing, the MEIC and other parties argued the Public Service Commission should open a docket on a separate rate class for data centers, and Hedges said she hopes the PSC combines the proceedings.
Petersen, with the PSC, said she couldn’t speculate on when a hearing might be scheduled in the tariff proposal. She also said any decision to combine a tariff and rate docket would be taken up by the Commission if it’s formally requested.