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Bill Summary · HB 1038

Legislative bill overview

HB 1038 authorizes South Dakota's Public Utilities Commission to charge data centers customer rates based on their actual operational costs rather than standard utility rates. The bill has passed both the Senate Commerce and Energy Committee and the full Senate with overwhelming bipartisan support (32-2).

Why is this important

Data centers consume enormous amounts of electricity and water, and this bill allows utilities to recover true infrastructure costs from these heavy-use customers rather than spreading costs across residential and small business ratepayers. This affects both data center expansion incentives in South Dakota and how utility bills are distributed across different customer classes.

Potential points of contention

  • Cost-shifting concerns: Residential and small business customers may see higher rates if data center costs are separated out, though proponents argue this creates fairness by making heavy users pay proportional costs
  • Economic development trade-off: Lower predictable rates have been used to attract tech investment; actual-cost pricing may reduce South Dakota's competitiveness for new data center facilities
  • Rate volatility: Actual-cost assessment could create fluctuating rates for data centers, making long-term planning difficult, versus the stability of fixed commercial rates

Compiled from official sources — confirm details with the bill’s official record.

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