Data centers

The Minnesota Legislature established clear guidelines under Minn. Stat. §§ 216B.1622 and 216B.1623 (2025) to protect the public interest. These laws include: 

• Cost responsibility: Utilities cannot pass the costs of serving a data center to other ratepayers. Data centers are required to pay for all necessary electrical system upgrades and buildouts.  

• Clean energy compliance: Data centers must comply with the state’s Carbon-Free 2040 benchmarks. Utilities must demonstrate in their plans how service to these large customers will not interfere with meeting these state-wide mandates.  

• Community support: Qualified large-scale data centers are required to pay an annual fee ($2 million to $5 million, based on a data center’s peak demand) to the Department of Commerce’s ECO fund, which supports low-income home weatherization.  

• Rate classifications: Utilities are required to propose special electric rates (tariffs) for very large customers that clearly account for the unique energy demands of these facilities. 

An Electric Service Agreement (ESA) is a contract between a rate regulated electric utility and a large customer that requires significant electric service – such as a data center, mine, refinery, paper mill, recycling facility, or cooling storage operation. ESAs outline the electric service needs of the customer and establish how the utility will meet those needs. 

Key regulatory requirements for large customers 

Under Minnesota law, including updates enacted in 2025, large electric customers must meet various requirements, which may include: 

• Filing or participating in an ESA or large load tariff review 

• Demonstrating compliance with applicable state statutes 

• Undergoing environmental review if specified thresholds are exceeded. More information on environmental review and data centers is found on the Environmental Quality Board’s website.

• Ensuring their electric service needs do not harm system reliability or other ratepayers 

The PUC’s role

Large-scale data centers often require new electric facilities. The PUC’s responsibilities include: 

• Ensuring utilities meet demand reliably and safely 

• Protecting ratepayers from costs driven by service to large-scale data centers 

• Reviewing proposed customer-specific rates or incentives 

• Overseeing related utility infrastructure investments 

These filings move through a structured PUC review process that includes: 

1. Utility filing: The utility submits the ESA and any associated tariff information. 

2. Public notice & comment period: The public is invited to review the filing and submit written comments. 

3. PUC review and decision: The Commission will approve, modify, or reject the agreement at a public Commission meeting (called an Agenda Meeting). The Commission evaluates whether the agreement meets applicable legal standards and is in the public interest.  

Utilities file ESAs with the Minnesota PUC. While the Commission emphasizes transparency, some components may be legally classified as trade secret to protect competitively sensitive information. Examples of elements that may be nonpublic include: 

• Customer demand/load estimates 

• Construction cost estimates for electric infrastructure 

• Construction timelines 

• Detailed rate information that differs from standard tariffs 

The Commission reviews all confidentiality requests and determines what information is public according to the Minnesota Government Data Practices Act (Minnesota Statutes chapter 13). 

The Commission is currently reviewing the following Electric Service Agreements: 

Minnesota Power and Harmony Group, LLC Status:  

• Status: Filed on March 26, 2026. 

• Details: An ESA between Minnesota Power and Harmony Group, LLC (a subsidiary of Alphabet/Google) for a data center in Hermantown, Minnesota.  

• Public Comment: The comment period is open until August 28, 2026. Following the close of the comment period, the Commission will hold a public meeting to deliberate and decide on the agreement. Here are the public comment details.

• Docket 26-159 

Xcel Energy and Echo Zone, LLC  

• Status: Filed on April 14, 2026. 

• Details: An ESA between Xcel Energy and Echo Zone, LLC (a subsidiary of Google) for a data center in Pine Island, Minnesota.  

• Public Comment: The comment period is open until September 8, 2026. Following the close of the comment period, the Commission will hold a public meeting to deliberate and decide on the agreement. Here are the public comment details.

• Docket 26-170 

Minnesota law requires that electric generation facilities over 50 MW of certain fuel types must first obtain a Certificate of Need (Minn. Stat. 216B.2421) and Site Permit from the Commission (Minn. Stat. 216I.05). This includes proposals for backup generation at a data center. 

• Carbon Free Standard and energy storage projects: Solar and wind projects used for Carbon Free Standard compliance and energy storage systems are exempt from the Certificate of Need requirement. 

• Cost and environmental impact: A key requirement for a Certificate of Need is an evaluation of alternative means of meeting the specified energy demand. This alternatives analysis covers both costs and impact to humans and the environment. 

• Renewables must be considered: A Certificate of Need may not be issued for a non-renewable project unless the applicant has thoroughly explored using renewable resources. 

• Environmental review required: To receive a site permit, the following types of projects must undergo an Environmental Assessment by the Commission:  

  • Generation between 50-80 MW 

  • Natural gas and solar projects at least 50 MW 

  • Wind projects at least 5 MW 

  • Energy storage at least 10 MW 

• Environmental Impact Statement required: All other projects needing a site permit, including 80 MW or greater generation, require an Environmental Impact Statement