Energy watchdogs say NorthWestern Energy needs to stop hiding information about data centers from the public, and it needs to acknowledge the Public Service Commission is more than a “rubber stamp.”
Earthjustice sent two letters, dated Oct. 15 and 17, to the Public Service Commission on behalf of the Montana Environmental Information Center, Honor the Earth, and NW Energy Coalition.
The groups allege NorthWestern is moving forward on agreements with data centers without required approval from the PSC — and in violation of Montana law. The utility said it doesn’t believe it’s flouting the law.
NorthWestern Energy has announced plans to serve at least three, and as many as five, data centers, with a total load of nearly 1,175 MW in the next few years, reaching 2,250 MW by 2030, said one letter, citing various public reports from the utility.
The groups estimate NorthWestern’s daily average load could double as a result.
The planned data centers have sparked controversy in Montana, with some business interests arguing they will spur economic opportunities in the state, but customer advocates and energy watchdogs arguing the benefit isn’t worth the cost.
In an email to the Daily Montanan on Monday, NorthWestern Energy spokesperson Jo Dee Black said the company should be able to help Montana benefit from the trend.
“Montana should not be left behind from benefiting from the growing data center industry,” Black said. “NorthWestern Energy is committed to supporting this economic opportunity through reliable energy service, strategic investment, and collaboration.”
In December 2024, NorthWestern Energy started touting plans to supply electricity to data centers, but it hasn’t complied with the Public Service Commission’s attempts to obtain information about the deals, the watchdogs allege in recent letters from Earthjustice.
“Nearly one year later, NorthWestern is still stonewalling and defying this Commissions’ regulatory authority,” said one of the letters, dated Oct. 15, to the Public Service Commission.
Last month, the PSC itself requested copies of all letters of intent, contracts, agreements and other information related to NorthWestern’s news releases about data centers; its evaluation methods for deciding whether service to those centers would hurt other customers; and other information.
Across the country, data centers are projected to push up electricity bills 8% in the next five years and as much as 25% in Virginia, said the second letter from Earthjustice, dated Oct. 17.
In its own letter to the Public Service Commission, NorthWestern said it will provide documents, but argues it must do so under a protective order to “ensure appropriate confidentiality.”
It said some of the information the PSC wants, such as modeling approaches, are still being developed. But the state’s largest public utility said it disagrees that it’s violating PSC oversight laws by moving forward with data centers.
Montana law states that a public utility can provide service to a large retail customer if the customer shows that service won’t “adversely impact” other customers over the long term “as determined by the commission.”
(NorthWestern’s position is that the law doesn’t apply to new customers, just to ones that existed in 2007, when the law passed, although the PSC said the utility’s interpretation doesn’t align with definitions in state law.)
NorthWestern Energy’s request to file information under a protective order — which would make it available to the PSC but keep it from public view — is pending before the Public Service Commission.
However, in one recent letter, the groups represented by Earthjustice urged the PSC to deny NorthWestern’s motion, arguing it is “severely deficient and fails to provide any description of the information it is shielding from public view.”
“It also fails to provide an adequate explanation of why such information is confidential or subject to trade secret protections,” the first letter said.
In the second, 16-page letter, the groups outline the risks they believe existing ratepayers will face if NorthWestern provides service to “large load” data centers and advocate for the creation of a customer class “specific to data centers.”
The groups also underscore the Public Service Commission’s “statutory obligation to ensure that NorthWestern proves no adverse impact on existing ratepayers before agreeing to provide service to large load customers.”
The letter said a growing body of evidence shows that without proper regulation, customers are at risk of increases to their electricity bills from data centers.
Citing Harvard Law experts, the letter said “negotiated rates between utilities and data centers charged through special contracts risk cost recovery shortfalls that all other ratepayers have to later subsidize through higher bills.”
It said Duke Energy, based in North Carolina, planned to shift $325 million in energy costs supplying a data center to existing ratepayers, but that information was only discovered in litigation.
“In the normal course, private contracts between a utility and new large-load customers may never receive scrutiny to ensure ratepayers are protected,” the letter said.
The letter said new research also shows utilities need to invest in “costly transmission upgrades” to supply data centers, and in other jurisdictions, those costs are already “plaguing retail customers.”
Bills for customers of PJM, which serves 13 states in the east and the District of Columbia, already have increased “unreasonably” because the costs of data centers have been spread over all customers, not allocated to the class responsible for the costs, the letter said.
“The combined results of this cost-shifting has been dramatic in regions already experiencing data center growth,” the letter said. “The Associated Press reported that the PJM’s market watchdog calculated that 70% — or $9.3 billion — of increased electricity cost over the past year was caused by data center demand.”
In an email Monday, NorthWestern Energy spokesperson Black said new customers will pay “their share of the integration and services they require.”
In the letter from Earthjustice, the groups said NorthWestern’s decision to work on contracts before the Commission had even figured out if existing ratepayers were going to be harmed flies in face of the plain language of the law.
NorthWestern, however, said in the next couple of months it plans to file “a large load tariff” that will provide a venue for the PSC and stakeholders to “discuss the impacts” of data centers and “establish a transparent process” for evaluating service contracts.
“Our goal is to ensure that all interested parties have a clear and consistent framework for addressing these critical issues, while continuing to support Montana’s economic development and protecting existing customers,” NorthWestern said in its September letter to the PSC.
It said it plans to file letters of intent under a protective order — still pending before the PSC. It said it does not have contracts with any companies it’s mentioned in press releases yet but is working on agreements and will share them.
It said its plan to file that “large load” proceeding and submit customer contracts for “Commission review” “likely mitigates our difference of interpretation (of the law) and provides a constructive path forward.”
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