North Dakota utility regulators take up MDU rate increase, data center cases

MDU has proposed an interim rate increase in which a typical residential customer will see an increase of about $12.90 per month, or 12.3% over current rates. If approved, interim rates would kick in Sept. 1. It would increase revenue by $26.3 million annually. 

The company filed for the 14.5% rate increase on June 30. It would increase revenues by $34.5 million annually. The company last requested a rate increase four years ago.  

While the PSC will decide how much of a rate increase to grant MDU, the company made a  presentation last week to the Legislature’s Energy Development and Transmission Committee.

Travis Jacobson, vice president for regulatory affairs for MDU, told lawmakers that the rate increase request is not related to data centers it serves or data center projects. 

Data center concerns dominate public comment for new legislative committee

MDU says the rate case addresses increased operations and maintenance expenses since MDU’s last rate case filing in 2022, as well as significant investments in electric infrastructure. One significant expense is increased labor costs, the company said.

One large grid project that is not related to rate request, Jacobson said, is the Jamestown to Ellendale high-voltage line, also known as JETx.

Lawmakers had questions about other aspects of MDU’s operations. Rep. Anna Novak, R-Hazen and chair of the committee, asked how it made economic sense for MDU to shut down a coal-fired plant near Sidney, Montana, and another near Mandan. 

Jacobson said the aging facilities were no longer economical to run and were operated at a minimum level while the company evaluated other power generation options. He said the opportunity to purchase Badger Wind near Wishek in south-central North Dakota made more economic sense. 

The company also added natural gas generation at Mandan.

Sen. Brad Bekkedahl, R-Williston, asked if the Badger Wind purchase was part of the reason for the rate increase. Jacobson said there is a separate rider on bills to pay for Badger Wind, and it is not related to the current rate increase request. 

Bekkedahl also asked if a data center in northwest North Dakota is driving up costs for MDU customers. 

Jacobson explained the data center was not served by MDU, but the data center’s power use caused transmission line congestion that affected MDU. MDU added a rider to help cover court costs in a legal dispute over the issue. 

Jacobson said the company is awaiting a ruling in the case but the extra litigation fee has ended. 

New data center

Jacobson said MDU has entered an agreement with Applied Digital to supply power to a data center near Center, northwest of Bismarck.  

MDU has a request filed with the PSC to extend electrical service to that project.

People have until Sept. 7 to file written objections to that request based on public convenience and necessity. Objections may trigger a hearing. 

One company, Innovative Energy Alliance Cooperative, based in Dickinson, has already filed a letter saying it will file a protest. Innovative Energy Alliance includes the KEM Electric, Mor-Gran-Sou Electric, Roughrider Electric and Slope Electric cooperatives. 

Applied Digital is the company that operates a large data center near Ellendale in south-central North Dakota and is building another at Harwood, north of Fargo. 

MDU serves the Ellendale site. Its use of excess wind energy in the region has meant money back for MDU customers. 

The utility says it has structured its rates so that large energy users, including data centers, do not increase costs for other customers. 

Power use by large customers means that North Dakota customers received $45.4 million in benefits over the last three years, or about $62 per customer, according to the MDU presentation. Customers in South Dakota and Montana have seen a smaller benefit. 

MDU is among the utilities that have signed a Trump administration pledge not to pass data center costs onto customers, as has North Dakota Gov. Kelly Armstrong.

Reach North Dakota Monitor deputy editor Jeff Beach at jbeach@northdakotamonitor.com

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