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Minnesota Power outlines utility and tax benefits of proposed Hermantown data center
Summary
Minnesota Power told the council a large customer could lower per‑customer utility costs and that 2025 law creates a new local sales tax on electricity sales to data centers; staff estimated at least a low‑millions annual benefit to Hermantown from electricity consumption.
Julie Pierce, speaking for Minnesota Power, presented three categories of economic effects tied to the proposed Google Hermantown data center: system cost spreading that can yield customer savings, a newly applicable local sales tax on electricity sales created by 2025 state law, and additional property taxes tied to new electric infrastructure.
Pierce said the utility has estimated "600 to $800 million of benefits over the first 15 years" if the customer connects to the system and explained that changes to state law removed a previous data‑center exemption so electricity sales to qualifying data centers now generate a local sales tax. She said the law would give Hermantown 1.5% of those sales and St. Louis County 0.5%, and estimated "a couple of million dollars per year on the low end" could accrue to Hermantown based on projected usage in the AUR.
Pierce also noted that if the large customer did not connect, Minnesota Power customers would face higher costs spread across the customer base (the presentation cited roughly $40 million per year on a 15‑year basis as the distributed cost figure). She told the council Minnesota Power has communicated the electric service agreement and projections to the Minnesota Public Utilities Commission and that the utility will continue to provide updates as numbers are refined.
