Sheri Haugen-Hoffart

Data centers are becoming one of North Dakota’s fastest growing types of development, bringing with them enormous electricity demand and new questions about oversight. But as these facilities appear in both rural and urban areas, many residents are discovering that the state agency they assume regulates them — the North Dakota Public Service Commission — has very limited authority over the centers themselves.

Let me explain. The PSC’s role is often misunderstood because data centers rely heavily on the energy infrastructure the commission does regulate in some cases. But the PSC does not regulate the data centers as standalone facilities. Instead, its authority is tied almost entirely to the utilities and power systems that serve them.

So how is the Public Service Commission involved? What is our authority?

Data centers require vast amounts of electricity — sometimes hundreds of megawatts — to run servers, cooling systems, and backup equipment. That demand often triggers the need for:

– New high‒voltage transmission lines

– New or expanded substations

– Major upgrades to existing utility infrastructure

– Changes in utility rates to cover new costs

Those are all areas where the PSC has clear jurisdiction. The commission reviews and approves new large energy infrastructure projects, and it regulates the three investor‒owned utilities in the state: Montana‒Dakota Utilities (MDU), Otter Tail Power and Xcel Energy. When a data center is served by one of the utilities or requires new infrastructure, the PSC must evaluate the impacts on reliability, cost, and the broader grid. When served by one of the investor-owned utilities, any substation, transmission line, or major upgrade built specifically for a data center must be paid for by the customer that needs it, not by other utility ratepayers.

So, where does the PSC’s authority stop?

Despite our involvement with utilities, the PSC has no direct regulatory authority over data centers themselves. That means:

– No siting approval. The PSC cannot decide where a data center can or cannot be built.

– No oversight of operations. The commission does not regulate noise, emissions, water use, or other operational impacts.

– No authority over electric cooperatives. Many data centers connect to rural electric cooperatives, which the PSC does not regulate. In those cases, the PSC may have no involvement at all.

– No ability to require permits. Data centers can be built without any PSC‒issued permit unless they trigger a utility‒related proceeding, such as construction of transmission or generation facilities to serve it.

North Dakota’s regulatory framework was built decades before data centers became major energy consumers. The PSC’s authority focuses on public utilities, not private industrial facilities. House Bill No. 1579 was introduced in the 2025 Legislative Session and would have given the PSC direct authority over data center siting, but it was withdrawn before lawmakers voted on it. During the 2025-26 interim, the legislative management is studying the impact of large energy consumers, including data centers, on the electrical grid of this state, regulatory structure, and economic development.

For now, the PSC’s role remains narrowly defined: it is involved in certain aspects of regulating the power lines, substations, and investor‒owned utilities that make data centers possible — but not the data centers themselves.