This story was originally published by the Daily Montanan.
Keila Szpaller
Daily Montanan
The Montana Public Service Commission needs to investigate NorthWestern Energy’s actions in relation to data centers to protect existing consumers, says a complaint announced Nov. 18 by Earthjustice.
The complaint alleges NorthWestern Energy’s plan to supply electricity to data centers before the Public Service Commission determines that doing so won’t hurt other customers is against the law, and regulators need to investigate the monopoly utility.
Earthjustice filed the complaint Monday with the Public Service Commission on behalf of a coalition of groups representing conservation, Indigenous, senior citizen, faith, and social justice interests.
NorthWestern Energy, the state’s largest public utility, has entered letters of intent to provide as much as 1,400 megawatts of electricity to three data center developers in Montana, roughly double its current average, said the complaint.
“To serve this extreme demand, NorthWestern would need to make transmission upgrades and likely obtain new sources of electricity generation, which would likely lead to further increases in utility bills for NorthWestern’s other customers,” Earthjustice said in its announcement.
In an email, NorthWestern spokesperson Jo Dee Black said data centers “will pay their fair share.” Black said the utility supports the economic opportunity the data centers offer through “reliable service, strategic investment, and collaboration.”
“Montana should not be left behind in benefitting from the growing data center industry,” Black said in an email.
The complaint points to NorthWestern Energy’s letters of intent with three data center companies, Atlas Power Group, Sabey Data Center Properties, and Quantica Infrastructure.
Atlas and Sabey have announced plans for data centers in Butte, and Quantica is working on a project outside Billings, according to earlier announcements from NorthWestern.
“NorthWestern has publicly disclosed that it intends to meet: Atlas’s initial 75 megawatts demand beginning in January 2026, with expected growth up to 150 megawatts; Sabey’s initial demand of 50 megawatts beginning in mid-2027, with expected growth to 250 megawatts; and Quantica’s initial demand of 175 megawatts beginning in 2028, with phased growth to 500 megawatts by 2030, and expected growth to 1,000 megawatts,” the groups said.
The complaint said the utility plans to provide service to certain data centers in Montana as early as January 2026.
However, a NorthWestern spokesperson said the utility plans to serve electricity supply to data centers starting sometime in 2026, but not as soon as January; NorthWestern also said it will not do so until the Public Service Commission approves any contracts and approves a new tariff that is specific to data centers.
A utility tariff sets the price, terms and conditions for a customer class, according to a U.S. Department of Energy National Laboratory policy brief.
But the complaint said NorthWestern has asserted it will not seek review by the Public Service Commission until after it has executed electricity supply contracts with data centers, “which directly contradicts the plain language” of the law.
As such, the groups are asking the Public Service Commission to inform NorthWestern that it “shall not” provide electricity to large load customers until regulators determine the service will not hurt other customers over the long run.
To make the determination, the groups ask the Public Service Commission to set a hearing to investigate the issues outlined in the complaint.
In a corresponding petition, the groups also are asking the Public Service Commission to interpret state law.
The groups want the Public Service Commission to confirm the law doesn’t allow large customers to buy electricity from a public utility unless they request the service, and unless they demonstrate it won’t adversely impact other customers over the long run, “as determined by the Commission.”
The groups note that statute defines large customers as ones that have a load with an average monthly demand greater than or equal to five megawatts, which would include data center customers.
The Public Service Commission already said as much to NorthWestern Energy in a Sept. 3 letter. The letter called on the utility to provide documents, including any agreements; evaluation methods; and process the utility intends to follow to ensure compliance with the law.
“The Commission expects NorthWestern to inform prospective customers with loads equal to or exceeding 5 megawatts that they are not required to receive electricity supply service from NorthWestern,” the Public Service Commission said. “At the same time, NorthWestern is obligated to serve such customers if they request supply service and meet the statutory standard.”
NorthWestern has stated that it disagrees with the Public Service Commission’s interpretation and plans to carry on under its own assessment, which is that the statute applies to customers that existed prior to Oct. 1, 2007, but not new ones, the complaint said.
“Indeed, NorthWestern’s public statements paint a picture of a public utility intent on ignoring the Commission’s stated interpretation of governing law,” said the petition for a declaratory ruling.
In an April 30 earnings call, NorthWestern CEO Brian Bird outlined the process for supplying electricity to data centers, the petition said.
“There’s a data center request, there’s a high-level assessment, there’s a contractual estimate, a completed contract and then construction,” Bird said, as cited in the complaint.
It said Bird stated that NorthWestern was completing transmission service agreement studies with respect to Atlas and Sabey “to calculate total costs, if necessary, to finalize the contract.”
“Finally, Mr. Bird admitted that NorthWestern would have to ‘build generation’ to serve any additional data centers other than Sabey and Atlas,” the petition said.
To meet energy demands of data centers, the groups said public utilities generally have to make “expensive investments in equipment and infrastructure,” including substations, expanded transmission and distribution, and sometimes new generation.”
But the groups said the investments are expensive to make, and costs can be “difficult to attribute to a specific data center,” so the challenge is that “opaque costs” can spill over to other customers without careful oversight from regulators.
To best exercise its authority to supervise public utilities, the groups ask the Public Service Commission to create “a new, distinct customer class for large load data centers,” which they describe as “fundamentally distinct” from other large customers.
The groups also argue the Public Service Commission should establish a separate tariff, or tool that outlines rates, terms and conditions for energy service, for data centers to protect existing ratepayers and ensure uniform regulation of data centers.
In the complaint, Earthjustice represents Big Sky 55+, Butte Watchdogs for Social and Environmental Justice, Climate Smart Missoula, Golden Triangle Resource Council, Helena Interfaith Climate Advocates, Honor the Earth, Montana Environmental Information Center, Montana Public Interest Research Group, and NW Energy Coalition.
“Montana’s seniors, many on fixed incomes, should not be forced to subsidize artificial intelligence data centers,” said Terry Minow, chair of Big Sky 55+, in a statement provided by Earthjustice. “We ask the PSC to require large load data centers to pay their fair share of utility costs. Otherwise, Montanans will be left struggling with the burden of even higher utility costs while big, out-of-state businesses take home the profits.”
Public Service Commission executive director Alana Lake said state statute does not prescribe a specific timeline for action, but the commission will follow a “well-established and transparent” process.
“Upon receiving a complaint, we formally open a docket, serve the filing on the defendant — in this case, NorthWestern Energy — and request a response within 20 days. We then provide the complainant(s) an opportunity to reply,” Lake said in an email.