Committee hears mixed testimony on bill to allow PSC exemptions for certain electric generators and projects

The North Dakota House Energy and Natural Resources Committee heard hours of testimony on House Bill 1111, a proposal that would allow the North Dakota Public Service Commission to exempt certain electric public utilities from specified regulations if the commission finds an exemption is in the public interest. Supporters said the change would provide regulatory clarity for unique projects; opponents said it could threaten reliability, territorial integrity, and impose uncertainty for existing utilities.

Commissioner Dave Christmann of the North Dakota Public Service Commission testified that the proposal is intended to provide limited flexibility for unusual or one‑off commercial arrangements. "To be clear, this bill is not about deregulation, which the commission strongly opposes," Christmann said, adding that the commission could enforce conditions on any exemption and retain jurisdiction to reinstate regulation if needed.

Christmann described inquiries from large potential electricity users and data centers that have generation needs far beyond traditional local loads and said the commission sought the change to address novel business arrangements. "We had a technical conference last summer. It was primarily about data centers," Christmann said, noting the commission had seen inquiries in the hundreds and "in the 1,000s of megawatts" from entities seeking to provide or use large volumes of power, sometimes served off the grid. He offered an example: "Maybe you have two sufficiently sophisticated businesses, one to use the power, the data processor, one to generate it, operating completely off the grid, impacting no one else."

Representative Novak asked whether a party that disagreed with an exemption would have recourse. Christmann answered, "Almost everything we do and absolutely yes to your question because...almost everything we do is subject to appeal." Representative Hedlund pressed whether the bill gave the PSC overly broad discretion; Christmann responded that flexibility would be balanced by appeals and by weighing alternatives.

Rainbow Energy Center, represented by Jessica Bell, testified in support and offered an amendment that would create a narrowly defined category of "independent power producer" and exempt those entities. Bell described Rainbow's 2022 purchase of Coal Creek Station and said the company is pursuing carbon capture, incremental generation and agreements with data centers. "We would not need to seek the exemption if the amendment was adopted," Bell said, explaining the amendment would codify in statute a public‑interest exemption the commission currently applies in practice.

Opposition testimony came from Josh Kramer, general manager of the North Dakota Association of Electric Cooperatives. Kramer said the bill is too vague on how exemptions would be awarded and could undermine the state's territorial integrity protections and grid reliability. "We oppose legislation that may exempt a public utility of the commission's choosing from regulation," Kramer said, and he asked whether the bill would set load minimums or define how existing providers must accommodate exempted entities.

Committee members questioned several details in the proffered amendment, including a proposed ownership threshold tied to a 50 percent‑of‑value test and the use of an IRS‑derived five‑member control test. Lawrence Bender, counsel for Rainbow, said the drafting drew from existing tax‑law definitions and indicated he would consult his client about raising the ownership threshold.

No committee vote was taken on House Bill 1111 during the hearing; the committee closed the public testimony portion and returned to other business. The bill drew testimony from the PSC, industry proponents and trade association opponents, and several members asked staff to clarify amendment language and thresholds before any further action.