Senate committee backs bill to make data centers pay PUC review costs
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Summary
The Senate Commerce and Energy Committee voted 7–2 to give House Bill 1038 a do-pass recommendation. The bill would allow the Public Utilities Commission to recover the cost of reviewing large data‑center contracts from the data centers themselves rather than from other utility customers.
The Senate Commerce and Energy Committee voted 7–2 to give House Bill 1038 a do-pass recommendation after hearing testimony that data centers’ unusually large electric loads require specialized review by the Public Utilities Commission (PUC) and that the entities seeking service should cover that review.<double back>Chris Nelson, chairman of the Public Utilities Commission, told the committee the bill does not change the PUC’s review process but would shift who pays for that review. "It's the data center, not the taxpayers," he said, arguing that for very large loads—"100 megawatts or 300 megawatts or 500 megawatts"—the commission needs extra resources to evaluate potential cost shifts to existing customers.
The bill was discussed as a narrowly focused measure to address the immediate prospect of data centers locating in South Dakota. Nelson said the PUC will perform the review regardless of the bill; the question is whether ratepayers or the cost causer should pay for it. "We think it's appropriate that the cost causer, that data center, pay for the review," he said.
Commissioner Feagin, who has worked with other states and regional grid organizations, described the amount of staff time and expertise large-load reviews can require. "We have the least staff in the country, for what we all do," she told the committee, saying South Dakota relies on outside experts and that charging the applicant helps ensure the commission can hire needed expertise without shifting costs to customers.
Drew Duncan, a registered lobbyist for Heartland Energy, said an amendment clarifies the bill’s scope and exempts municipal electric utilities and co‑ops from PUC jurisdiction on this matter. "The only thing that the amendment does is ensures that municipal electrics and co ops who already answer to separate boards...don't also have to answer to the Public Utilities Commission," he said.
Opponents did not appear at the hearing. Several senators raised questions about singling out data centers rather than any large new load. Senator Mellhoff pressed why the bill targets only data centers and said he preferred a broader approach; he later said he would "resist the motion" because of that narrow focus. Supporters including Senator Peterson and Senator Perry said the measure protects residential ratepayers by ensuring the entity that produces the need for extensive review bears its costs.
The committee’s do-pass recommendation means the bill will advance from committee with the committee's endorsement. The recorded vote on the due-pass motion was 7 yeas and 2 nays.
