The surge of new data center development is making people worried.
How much energy and water will these resource-hungry centers consume?
Will they drive new fossil fuel pollution?
How much will household electricity prices go up?
These questions have answers, but in many cases, the details of new data centers are blocked from public view.
Take this example from Montana. Quantica Infrastructure is planning to build a 5,000-acre energy and technology hub near Billings, Montana, which would use more electricity than all of the households in the state combined. The specifics are spelled out in the documents below – but they’re redacted.
Bipartisan opposition to data centers is growing fast, with 20 projects blocked or delayed nationwide in just a three-month period during spring 2025, according to the research group Data Center Watch.
But secret agreements make it nearly impossible for residents and elected officials to understand the impacts of data center development in their communities – or whether their electricity bills will soon be subsidizing Big Tech.
In Montana, advocacy groups are challenging NorthWestern Energy’s plans to serve data centers. (I’ve been involved as well: I serve on the steering committee of a fledgling nonprofit called Montanans for Affordable Energy.)
State Rep. Kelly Kortum, a Democrat from Bozeman, said he is wary of the proliferation of data center proposals in Montana, and he’s ready to push back.
“I’m looking to make sure the people don’t get screwed over,” he said. Kortum is a computer scientist who works in IT.
“I personally really need to know how much energy is being used and how much of that is public electricity,” he added. “And what’s that going to do to our rates?”
It starts with a letter of intent
As data center developers scope out plans for new projects, they first need to make sure they can get enough electricity to feed the data center. Often, they turn to the local utility and make basic arrangements to purchase electricity.
The agreement reached between the data center developer and the utility is spelled out in a letter of intent. It includes how much energy will be delivered, the prices, the time frame for when the new electric service will start, and how the utility will ensure that it delivers sufficient electricity to keep the data center churning along.
NorthWestern Energy in Montana has signed letters of intent with developers of three proposed data centers. These three agreements alone would more than double the average amount of electricity used by NorthWestern’s customers. The electricity would be generated by burning coal at Montana’s Colstrip power plant, one of the most polluting power plants in the U.S.
‘These are monopolies’
Ari Peskoe is the director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program and an author of “Extracting Profits from the Public: How Utility Ratepayers Are Paying for Big Tech’s Power.” The report lays out tactics that data centers are using to off-load their costs onto households, such as making secret deals with utilities.
“I mean, look, these are monopolies,” Peskoe said. “They ought to be held to a standard about transparency. That requires they provide meaningful information about major deals that they’re a part of.”
NorthWestern Energy, like many utilities in the U.S., is a regulated monopoly. That means that the company can operate without competition, but it’s overseen by a governmental body. In theory, public utility commissions serve as a backstop against price gouging and other unfair practices.
“The whole point of utility regulation is to really dive into the accounting records, the details, and make sure that the public is protected from their monopoly power,” Peskoe explained.
But in this instance, Montana’s Public Service Commission sided with NorthWestern Energy. The commission decided that “proprietary Letters of Intent information derives independent economic value or competitive advantage from its secrecy.”
Peskoe disagrees.
“They’re claiming that this is a private business deal, but it’s kind of not when you’re a regulated monopoly,” he said. “They ought to have a higher standard for the information they disclose to the public than other private companies.”
“’Trust us’ doesn’t really cut it when you’re a monopoly provider,” he added.
State legislation can help
A Montana bill that sought to address some of these issues (HJ-46) failed in the last legislative session, but Kortum, the representative from Bozeman, said that lawmakers will try again.
“Repeating the same bill builds knowledge with the legislators,” he said, noting that data centers are a new topic and many lawmakers are unfamiliar with the issues and possible solutions.
Kortum said when legislators don’t have a firm position one way or another, public input can hold more sway. For some lawmakers, “They have no dog in this race,” Kortum said. “I am expecting them to fall back on what the public wants,” he said.
What’s next?
For the Quantica Infrastructure project, the company already purchased 5,000 acres of land in a county with no zoning and limited local oversight. The project is scheduled to begin construction this year.
NorthWestern Energy said it plans to release a set of proposed terms and conditions for new data centers. These arrangements are called large load tariffs, and in theory, they can contain safeguards that help protect household energy users from shouldering the burden of new infrastructure. For example, the tariff could specify a minimum demand, so that if a data center uses less electricity than originally planned, it would still have to pay for the costs of all of the infrastructure built to bring electricity to the site.
NorthWestern Energy said it planned to file its large load tariff with Montana’s Public Service Commission by the end of 2025, but to date has not released a public plan.
In a recent NorthWestern Energy earnings call, the company appeared to walk back its earlier statement.
“We had said we will file a large load tariff, but I would note that that was tied to signing an ESA,” said Crystal Lail, NorthWestern Energy’s vice president and chief financial officer.
An ESA is an electric service agreement that spells out the specifics of the service between the utility and the data center. By the time a utility and a developer have an electric service agreement, it means the project is less of a proposal and more of a sure bet. In other words, the utility won’t share more details until the project is closer to reality, which also means it could be harder for communities to intervene.
What’s more, electric service agreements are also sometimes hidden from the public. For example, here’s an excerpt from the electric service agreement between Leola Data Center and Montana-Dakota Utilities in North Dakota.
NorthWestern’s Lail said the company wants to “get ahead of this argument that data centers aren’t paying their fair share.”
NorthWestern Energy CEO Brian Bird said the company expects to release its new large load tariff by the middle of 2026, six months later than originally promised.
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