Update provisions related to certain large-use customers of utilities.
SB 128 would create a new regulatory framework for very large electric customers, especially data centers, and would also revise existing utility law to define and treat “large-use customers” as a separate class. The bill defines a large-use customer as a customer established after July 1, 2026, with a contracted electric demand of 2,000 kilowatts or more. For those customers, it requires separate utility tariffs, cost-based allocation of incremental utility costs, commission oversight, and the ability to negotiate contracted rates under specified conditions. It also amends the law governing service-area exceptions so that large new loads may seek service outside an assigned area if the Public Utilities Commission approves after considering service needs, supply availability, system development, proximity, customer preference, and other factors.
The bill also adds water-use requirements for data centers. A data center large-use customer would have to coordinate with local water providers, use closed-loop cooling technology, stay within water-use limits set by the Water Management Board, reduce water use during shortages, and file quarterly water-use reports that the board must make public. In addition, the bill requires large-use customers to curtail electric usage during declared or forecast energy shortages until residential and essential public service demand is met. The measure would therefore affect utility regulation, water management, public utility commission rulemaking, and reporting obligations for large industrial or digital infrastructure users.
The general sentiment reflected in the available voting history appears mixed to cautious. The bill was not advanced outright; instead, it was deferred to the 41st legislative day by a 5-3 vote, which suggests some support for further consideration but not enough agreement to move it forward at that time. No committee transcript is available, so there is no recorded discussion to indicate broader consensus or opposition beyond the vote itself.
The main points of contention likely center on how the bill allocates costs and resources between large users and other customers. Supporters may view the bill as protecting residential customers and essential public services from bearing the costs of large-load utility demand, while also addressing water-supply concerns tied to data centers. Opponents may be concerned about the regulatory burden, the public disclosure of usage data, the limits on negotiated utility rates, and whether the bill could discourage large economic development projects by imposing stricter water and power requirements. The requirement that large-use customers curtail usage during shortages may also be seen as necessary by some and overly restrictive by others.
SB 128 would amend South Dakota utility statutes to create a distinct legal category for large-use electric customers and to impose new tariff, reporting, and cost-allocation rules on public utilities serving them. It would also add new water-use obligations specifically for data centers, require Public Utilities Commission and Water Management Board rulemaking, and authorize public reporting of certain usage data. The bill would affect public utilities, telecommunications-related tax language, large industrial electricity users, data centers, and local water providers, while preserving commission oversight and allowing negotiated contracts under defined conditions.
Available voting history suggests the bill received some support but faced enough reservations that it was deferred rather than advanced. The 5-3 vote to defer to the 41st legislative day indicates a cautious or divided posture. Because there are no committee transcript excerpts, the record does not show detailed debate, but the procedural outcome implies the proposal was not yet ready for consensus.
The likely areas of disagreement are the bill’s treatment of large-load customers as a separate class, the requirement that they bear incremental utility costs, and the limits on shifting costs to other customers. Another likely point of contention is the data-center water provisions, including mandatory closed-loop cooling, public reporting of water use, and restrictions during shortages. Stakeholders favoring economic development and flexible utility contracting may object to the bill’s prescriptive requirements, while consumer advocates, water managers, and utilities concerned about system impacts may support the protections for residential customers and essential public services.