What happens to utility bills when data centers come to town?

NorthWestern Energy, Montana's largest utility, has entered into agreements with at least three data centers and seen interest from 11 additional companies looking to establish operations in the state. These partnerships represent a significant revenue growth opportunity for NorthWestern Energy's shareholders. However, consumer advocates and environmental groups are expressing strong concerns that the costs of new infrastructure, such as power plants, substations, and transmission lines required to serve these energy-intensive data centers, will be passed on to existing 413,000 Montanan ratepayers, who have already experienced recent rate hikes. These concerns have led to Public Service Commission (PSC) hearings in Helena and packed town hall meetings across the state, from Broadview to Great Falls. A coalition, comprising consumer advocates worried about higher power bills and environmental groups opposing fossil fuel development, is urging the all-Republican utility board to enhance transparency and scrutiny of NorthWestern Energy's data center deals. In a November 2025 filing, the coalition alleged that NorthWestern has "short-circuited" the public's right to information, potentially leaving Montanans to bear financial burdens from secret agreements. Ari Peskoe, director of Harvard's Electricity Law Initiative, provided insights into how utilities nationwide can "socialize" data center infrastructure investments by building new capacity and recovering costs from all ratepayers, including existing residential and commercial customers. He highlighted the challenge for regulators to ensure data centers pay their fair share for new infrastructure. Peskoe also discussed the risk of "stranded assets" if data centers cease operations, leaving ratepayers to cover the costs of unused infrastructure. He suggested that utility spinoffs designed to serve data centers must be carefully fenced off from regulated operations to prevent subsidies from existing ratepayers. Peskoe emphasized the need for transparency in utility-data center contracts and the potential benefits of large-load tariffs, which can establish standard terms and conditions for new data center customers, often including long-term payment guarantees (10-15 years) to protect consumers from stranded asset risks. While structured correctly, large loads can exert downward pressure on rates, strong oversight is crucial to prevent rate increases for everyone. The article noted potential political pressures on regulators to approve projects backed by state economic development incentives, underscoring the complexity of managing data center growth.