Does Minnesota law protect residents from data center costs?

Governor Tim Walz signed a Minnesota law last year designed to protect residential customers from rising electricity bills due to the development of large data centers. This legislation establishes a distinct category for "very large" utility customers, predominantly data centers, mandating that they fully bear the costs of their electricity service and any necessary grid upgrades. The law also requires these facilities to conform with Minnesota's carbon-free power standard and avoid burdening other customers if they downsize or cease operations. The Minnesota Public Utilities Commission (PUC) is expected to decide in mid-May on a proposed "tariff" framework developed by Xcel Energy for this new customer class. Concurrently, Xcel Energy plans to file its service agreement for Google's proposed data center near Rochester in the coming weeks. Other Google data centers near Duluth and a Meta facility in Rosemount are also expected to fall under this "very large" customer designation, exceeding 100 megawatts. The state's proactive approach is a response to affordability concerns observed in other data center hubs. Oregon, for instance, saw Portland General Electric rates rise 50% in five years, prompting a similar ratepayer protection law. Virginia is also considering legislation to shift more costs onto tech companies after studies indicated data centers increased residential utility rates there. While ratepayer advocacy groups like the Citizens Utility Board of Minnesota and environmental advocates such as Vote Solar generally support the new law and Xcel's tariff proposal, some provisions remain points of contention. Minnesota Attorney General Keith Ellison's office has criticized Xcel's proposed "incremental cost test" for being "opaque." The Data Center Coalition, an industry group, has expressed concerns that Xcel's uncertain cost forecasts could unfairly burden data centers, though it supports cost-based rates. Google has requested the commission to instead determine costs through a standard regulatory rate case. Xcel's agreement with Google includes a "Clean Energy Accelerator Charge" to cover the cost of nearly 2 gigawatts of carbon-free power and $50 million for battery installations, which Xcel says will protect customers and advance clean energy.