Evan Barrett is a retired economic developer in Butte.
"I've been here 46 years," he says. "I'm almost a Butte guy."
Last spring he was perusing the Butte-Silver Bow Council of Commissioners meeting agendas when something caught his eye. It was a proposal to sell just over 600 acres of land west of town. Barrett sensed it was more than a simple land sale.
"I know a big project, what the impacts can be. I looked at that and said, 'boy, it looks like there's a lot of impacts here, and I don't think people know what it is.'"
A company bought the land for $1.2 million to build a data center. The new owner, Sabey Data Centers, has not finalized the deal with Butte-Silver Bow County, but is expected to early next year. Once built, it would be the second data center in this area. There’s another owned by Atlas Power Group in operation south of Butte that’s expected to double its power needs over the next few years.
Barrett asked for more time to consider the impacts of the project before the council voted on the land sale. The council denied his request.
"It's so easy to make the wrong decision, get all hyped up, promises of jobs – and yet, when it's finally over, not nearly that many jobs. 'Oh, it won't hurt the power rates.' Oh, yeah? Later on you get stiffed," Barrett says.
Barrett’s not the only voice asking for local governments to pump the brakes on data center development. He joined more than 50 people at a recent town hall at Montana Tech to discuss this proposal and ask questions of local organizers tracking the state’s impending data center growth.
Republican lawmakers passed several laws in recent years to attract data centers to the state.
Republican lawmakers, including the governor, want to see data centers come to Montana. Several laws passed in recent years incentivize companies to build here. Billings Republican Rep. Katie Zolnikov sponsored a new law this year lowering tax rates for data centers.
"Data centers – they’re not going away anytime soon. They’re getting more and more popular. So, with legislation like House Bill 424, Montana can be a competitive state and we can attract these businesses," Zolnikov said.
Data centers are essentially massive warehouses full of computers and cooling systems. They mine bitcoin, run artificial intelligence and store files uploaded into “the cloud." They require a tremendous amount of power to do that – making them enticing customers for utilities as well.
NorthWestern Energy, Montana’s largest monopoly utility, has signed letters of intent to power proposed data centers in Butte and Yellowstone County.
NorthWestern Energy uses 760 megawatts of electricity for all Montana customers. The company has agreed to provide roughly twice that amount to data centers.
Currently, the company uses 760 megawatts of electricity for all Montana customers. That includes homes and businesses. NorthWestern has agreed to provide roughly twice that amount to data centers.
For reference, that’s enough to power roughly 1.2 million homes. According to the Montana Department of Commerce, there are roughly 500,000 homes in Montana.
Derek Goldman is with the Northwest Energy Coalition, a renewable and affordable energy advocacy group.
"Where is 2,000 to 3,000 megawatts of new electric power going to come from," Goldman wonders, "and who's going to pay for it?"
NorthWestern Energy does not have the ability to generate the amount of power it has promised data centers. Utilities pass power generation costs on to their customers.
NorthWestern Energy does not have the ability to generate the amount of power it has promised data centers. The company will take over additional shares of the Colstrip power plant in January, but that won’t be enough. Utilities pass on power generation costs to their customers.
There are no regulations in place that would prevent NorthWestern Energy from passing data centers’ power costs onto all its other customers.
Goldman says these power agreements raise a lot of questions.
"How do we protect existing NorthWestern utility customers, both residential and commercial, from paying for some of the costs of the utility to supply power to the data centers?"
NorthWestern Energy has not publicly disclosed its agreements with data centers and how it plans to meet their power needs. The company has requested the state’s utility oversight board, the Public Service Commission, or PSC, keep that information confidential. Goldman, and several other environmental groups have asked the regulatory body to deny that request.
Goldman says unlike many states, Montana is in a unique position to pass regulations that protect customers before most data centers are on the ground.
"We're in an era of escalating energy prices in Montana, and we want to be able to protect customers from any additional increases to supply service to data centers."
Goldman says NorthWestern customers shouldn’t have to pay more, especially given the last two rate increases they’ve already experienced, independent of data center growth. According to the Bureau of Labor Statistics, electricity prices have risen by 40% since February of 2020.
But without guardrails in place, Goldman says anyone that gets power from NorthWestern could see their monthly bill go up.
Utility customers in other states have seen their bills drastically increase alongside data center development.
Utility customers in other states have seen their bills drastically increase alongside data center development. Like in Oregon where data center growth over the last five years has spiked demands for power. Portland General and Pacific Power customers now pay 50% more for electricity.
"What some states are doing is, they're trying to figure out – after the horse is out of the barn, unfortunately – how to regulate it and how to put some sideboards on data centers to protect other customers," Goldman says.
The Northwest Energy Coalition and three other environmental groups have asked the Montana utility regulators to implement several changes to protect ratepayers from higher power bills.
The Northwest Energy Coalition and three other environmental groups have asked the PSC to implement several changes that would protect Montanans from higher power bills. They include creating a customer class specific to data centers, and setting a minimum amount of electricity that a data center would be purchasing.
"We want big tech to work for Montanans, not the other way around," Goldman says. "We want data centers to be good community partners and continue to support electrical system reliability."
The PSC has not responded to their request.
In an email, PSC Executive Director Alana Lake declined MTPR’s request for an interview until the commission has a formal hearing on the issue. She wrote that the commission “expects to hold an informational meeting on these topics later this year or early next year.” The PSC had requested NorthWestern come before it to receive approval for its data center power agreements earlier this year. The utility disagrees that it needs the PSC’s approval.
NorthWestern Energy spokesperson Jo Dee Black says the utility plans to protect existing customers.
NorthWestern Energy spokesperson Jo Dee Black says the utility plans to protect existing customers.
"We have announced our intention to file an application for a new customer class and work collaboratively with new data center customers, stakeholders and the Montana Public Service Commission on a tariff for this new customer class in our regulated business."
At this time there is nothing to prevent current customers from subsidizing data centers cost.
