Will a data center locate in co-op territory?
STORY AND PHOTOS BY RYAN HALL | RURAL MONTANA EDITOR
Over the last four months, Rural Montana has looked at multiple aspects of data centers, from what they are, to how to power them to potential benefits they bring to communities and their drawbacks.
The question remains, will there be large-scale data centers in Montana, particularly in an electric co-op’s service area?
“Yes,” said Jason Brothen, manager of Lower Yellowstone Rural Electric, Mid-Yellowstone Electric and Goldenwest Electric cooperatives, when asked if he expected such a data center to be located in a co-op’s service area within the next five years.
Electric cooperatives were founded because large utilities didn’t want to serve areas with sparse populations that were not profitable. Rural communities banded together under the Rural Electrification Act, part of President Franklin Roosevelt’s New Deal, to ensure rural America had access to power.
Electric cooperatives don’t pick and choose their members, if you live in their service area and meet the requirements of membership, the cooperative has an obligation to serve. It is in cooperative bylaws, and it’s the law in Montana.
“Rules and regulations do not allow you to discriminate services,” Brothen said. “We can’t say, ‘No, we’re not serving you.’ As long as they meet our requirements and any permitting that pertains to us, and pay for the necessary infrastructure, we can’t say no. We don’t have a choice.”
He noted that other concerns such as road traffic and water usage that do not pertain to electric service cannot be considered by the co-op as a reason to deny service.
Montana is ready
In a phone interview, Gov. Greg Gianforte said, “Montana is open for business,” when it comes to data centers, or other large industrial businesses, but only if Montanans are protected from the associated risks.
“Being open for business doesn’t mean we are going to give anybody a blank check,” Gianforte said. “We can’t pass on their infrastructure and energy costs to hard-working Montanans.”
He noted that the Governor’s Energy Task Force, of which the state’s electric cooperatives were a member, worked hard over the last year to come up with recommendations to help shape what energy will look like in the state.
“The task force was a bipartisan effort to really map out Montana’s energy future,” Gianforte said. “I was very pleased with the results.”
He said the task force came up with 20 recommendations, ranging from ones that can be done with executive orders to some that will need to be passed by the Legislature to be implemented.
Those recommendations protect Montana resources such as water, ensure an “all-of-the-above” strategy for Montana’s energy future — meaning traditional fossil fuels, renewables and new technologies will all be part of the mix — and that electric ratepayers aren’t subsidizing new large loads, including data centers.
Gianforte added that he also has signed the Ratepayer Protection Pledge.
“That guarantees that if we have data centers in Montana, they pay their own costs (for energy development and use),” Gianforte said.
Co-ops protecting members
While Brothen predicts there will be a large-scale data center in an electric cooperative’s territory in the near future, he also said members shouldn’t be concerned because while co-ops have an obligation to serve, they also have an obligation to protect their members, who are owners at the co-op. Brothen also noted that if a large data center located in co-op country, it would have the same single vote as a residential account.
“We are going to have one,” Brothen said of data centers locating in an electric cooperative’s service area in Montana. “But we are going to have one in the right way.”
He said the power supplier for his cooperatives, Basin Electric Power Cooperative, has a large load commercial program that ensures any large load, including data centers, pay up front for any generation or transmission construction or improvements. It also ensures that the members are protected from stranded electric infrastructure costs if a data center were to fail, and ensures long-term reliability of power.
Brothen added that while a hyperscale AI data center has not been completed in Montana, that doesn’t mean there aren’t data centers in the state.
“They’re already here,” he said, noting that a couple crypto-mining players on Lower Yellowstone Rural Electric’s system have already converted half of their system to data centers, with the loads around 10 megawatts (MW). That is a significant load size for many electric cooperatives around the state, but pales in comparison to the 1,100 MW data center under development near Broadview.
Though 10MW sounds small in the scheme of data centers, Jason said that a load that size is more power coming through one meter, at its peak, than the entire Mid-Yellowstone Electric Cooperative system uses in nine months.
“That’s the impact these things can have,” Brothen said.
Stabilizing rates
Brothen likened data centers to the oil industry served by two of his cooperatives in the Bakken region, as well as across North Dakota. He said that large loads such as oil pumping stations can help stabilize a co-op’s rate when they pay their fair share.
“We stabilized for 27 years because of growth,” Brothen said. “Any time you get a chance to upgrade your transmission and distribution system through new loads coming on and paying for that, guess who isn’t having to replace that old system — the member who has been there for 50 years.
“Someone else is paying for that transmission system, that distribution system and that new substation,” Brothen said. “That stabilizes rates for a long time.”
Montana must be protected
Like Brothen, Gianforte stressed that a key to data centers benefitting co-op members, and Montanans in general, is that they pay their own way.
“They must build, bring or buy the power they need, and cover the full cost of infrastructure,” Gianforte said. “They also need to make long-term commitments (to ensure ratepayers don’t pay for infrastructure if a data center doesn’t last).”
He added that they also must be good stewards of the land, and Montana has regulations in place to ensure that.
Gianforte said the Department of Environmental Quality reviews all applicable water quality and consumption requirements, while the Department of Natural Resources and Conservation oversees water rights.
“It’s really a property-right issue,” Gianforte said, adding that the closed-loop cooling system used by modern data centers uses significantly less water than the evaporative system that was used in the past. “We have to make sure water is available, but that it doesn’t take from homeowners and agricultural use. We have an existing framework to ensure that does not occur.”
He said that just because Montana is open for business for data centers, doesn’t mean they should be everywhere. Gianforte said any data center developer needs to work with the local community to build support for the project within that community in order to be successful.
“We can support economic growth while also protecting the Montana way of life,” he said. “They shouldn’t be in everybody’s backyard. Montana has a lot of open space, that doesn’t mean that every spot is the right spot for a data center.”
Prospects in Montana
Several large-scale data centers have already been proposed in Montana, though nearly all were eventually scrapped. Missoula County has enacted a one-year moratorium on new data centers, and Butte-Silver Bow County has instructed its attorney to draft a proposed moratorium.
The state does have the Right to Compute Act, which was passed in 2025, and states that, “Government actions that restrict the ability to privately own or make use of computational resources for lawful purposes, which infringes on citizens’ fundamental rights to property and free expression, must be limited to those demonstrably necessary and narrowly tailored to fulfill a compelling government interest.”
The exact scope of that law is currently being questioned by the Yellowstone County Commission.
Proposed data center projects in Great Falls, near Butte, and in Bonner have all been shelved after local opposition.
At least one large data center is under development in Montana. Quantica Infrastructure and Big Sky Digital Infrastructure are developing the previously mentioned 1,100 MW AI data center outside of Broadview, near Billings, on about 5,100 acres of land. Tens of thousands of additional acres are being leased for renewable generation and a proposed natural gas power plant to power the data center. That data center would be served by NorthWestern Energy, not an electric cooperative, and plans to bring its own generation.
“The climate is good for Montana data center development,” said Charlie Baker, chief accounting officer for Quantica Infrastructure. Quantica handles site selection and preparation, power and network for data center development but does not build the actual facility. “Responsible data center development has the potential to bring huge economic development to the state.”
Though it is early in the process and the timeline may change, he said the hope is to have the Big Sky Campus near Broadview energized in 2030.
Sabey, which owns data centers in the Quincy, Washington area, among others, was the developer of the proposed data center in Butte. The company is still interested in locating in Montana, though there are no plans to pursue another location near Butte, officials said earlier this year.
“We are actively working with other communities,” said Ryan Beebout, vice president of Sabey Data Centers-West. “We want to be in Montana.”
He added that while the first proposal was in NorthWestern Energy’s territory, they are open to working with electric cooperatives. The Quincy facility is served by a public utility.
Beebout also said the company has a 20-year history of contributing to the local community and paying more than its fair share of power and infrastructure costs. A Grant County Public Utility District official previously said data centers near Quincy, including Sabey, pay 150 percent of the cost to serve those facilities. As a result, residents currently pay about 60 percent of the cost to serve their households.
“We are committed to paying our share, and to pay a rate that doesn’t impact other customers,” Beebout said.
Quantica has made similar statements.
“As a developer, we want to pay our own way. We do not want ratepayers to have increased costs in power rates,” Baker said.
He said the company is continuing to look for opportunities across the country, including in areas served by an electric cooperative.
“I don’t think there’s anything that would prevent it from being in co-op territory,” Baker said.