How Black Hills Energy Is Preparing For Surge Of Power-Hungry Wyoming Data Centers
Black Hills Energy is preparing for a significant increase in power demand from data centers in Wyoming, including "Project Jade." The utility relies on its decade-old "large-load tariff" which requires data centers to fund all necessary infrastructure, thereby insulating existing ratepayers from increased costs. This system, previously applied to Microsoft's data center, is being tested as projects scale to gigawatt capacities.
Black Hills Energy is facing a substantial increase in power demand from data centers proposing projects in Wyoming, with some, like "Project Jade," requiring as much as 10 gigawatts—nearly equivalent to the state's total peak power generation capacity. Project Jade's developers initially proposed a "bring-your-own-power" model to Laramie County officials, suggesting self-sufficiency to avoid straining the local grid. However, Black Hills Energy officials confirmed their partnership in the project, indicating the data center will still depend on the utility for infrastructure and interconnection.
Wes Ashton, Black Hills Energy’s vice president of utilities for Wyoming, South Dakota, and Montana, stated the company's objective is to prevent new large loads from shifting costs to existing customers. This is managed through a "large power contract service" (LPCS) tariff, which mandates that large-load customers, primarily data centers, bear the full cost of any required new infrastructure, transmission, or distribution upgrades. This tariff was initially developed over a decade ago in response to Microsoft's data center construction in Cheyenne.
The process involves detailed analyses of power requirements, negotiation of agreements, and state regulatory oversight to ensure existing ratepayers are protected. Ashton asserts this approach allows the utility to accommodate massive data center loads while isolating financial risk to the customers themselves, contributing to grid reliability improvements that benefit all customers. Despite public concerns about data center power consumption affecting consumer bills, Black Hills Energy maintains its tariff has slowed rate increases, offering an advantage to regular ratepayers, and remains confident in its scalability to gigawatt-level projects.