Otter Tail Power proposes special rates for data centers
Otter Tail Power, an electricity utility, has proposed special rates for large data centers consuming at least 75 megawatts in its South Dakota service territory. The application, submitted to the South Dakota Public Utilities Commission, aims to protect existing customers from potential cost increases or shortages caused by new data center loads. This move is in response to Senate Bill 135, a state law passed to protect utility customers from data center impacts.
Otter Tail Power, an electricity utility based in Minnesota, has submitted an application to the South Dakota Public Utilities Commission (PUC) to establish special electricity rates for large data centers. The proposed rate structure would apply to data centers requiring at least 75 megawatts of electricity and would be customized based on the unique cost characteristics of serving such large loads.
The utility states this proposal is a direct response to Senate Bill 135, a South Dakota law passed earlier this year, which aims to safeguard existing utility customers from potential cost increases or power shortages caused by data center development. Otter Tail Power emphasized that the new rates are designed to prevent "cross subsidies or stranded costs" for its current 134,000 customers across its service areas, including 12,000 in northeastern South Dakota.
Otter Tail Power, describing itself as a "very small investor-owned utility," noted that a data center requiring several hundred megawatts would necessitate significant new capacity and infrastructure. The company has made similar rate structure requests in Minnesota and North Dakota, also part of its service territory. The PUC received the application on July 27, and if approved, these special rates would facilitate the integration of potential large data center customers into its system while protecting current customers.