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HF 3296

Data centers excluded from gross annual retail energy sales for energy conservation and optimization purposes.

2025-2026 Regular Session Introduced by Dawn Gillman

HF 3296 would exclude qualifying data centers from a utility’s gross annual retail energy sales, reducing reported electric sales for planning and efficiency programs.

Introduction and first reading, referred to Energy Finance and Policy
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Bill Summary · HF 3296

HF 3296 (2025-2026) – Excluding Data Centers from Gross Annual Retail Energy Sales for Energy Conservation and Optimization Purposes

Overview

  • Jurisdiction: Minnesota
  • Session: 2025-2026
  • Bill Number: HF 3296
  • Introduced: May 2025
  • Committee: Energy Finance and Policy (referred upon introduction)
  • Sponsor: Primary sponsor not listed; co-sponsor Dawn Gillman

Purpose and Intent

The bill aims to modify the definition of “gross annual retail energy sales” for utilities in Minnesota by explicitly excluding data centers from the calculation under certain conditions. The stated goal is to support energy conservation and optimization efforts by removing a major source of measurement from gross retail energy sales, potentially affecting utility planning, demand-side programs, and rate design related to energy efficiency initiatives.

Key Provisions

1) New Definition

  • Subd. 3b. Data Center
    • Defines “Data center” as a freestanding structure that primarily contains electronic equipment used to process, store, and transmit digital information.

2) Exclusion of Data Centers from Gross Annual Retail Energy Sales

  • Subd. 10. Gross Annual Retail Energy Sales (Amended)
    • The term now excludes certain electric sales to:
    • Data mining facilities or data centers that meet the following conditions:
      • The facility has provided a signed letter to the utility verifying it meets the definition of a data center.
      • The facility imposes a peak electrical demand on a consumer-owned utility’s system equal to or greater than 40% of the peak electrical demand of that utility’s system, measured in the same manner as billing demand.
    • The exclusion applies to electric sales to these qualifying facilities and affects how gross annual retail energy sales are calculated for the utility.
    • Other exclusions retained:
    • Gas sales exclusions to large energy facilities or large/commercial gas customer facilities that are exempted under specified sections (216B.241), as currently defined in statute.
    • Electric vehicle charging exclusions:
    • Through December 31, 2032, electric vehicle charging-related sales, under a utility program/rate/tariff, are excluded based on a methodology developed by the Department of Commerce in consultation with stakeholders (as of 2021). After December 31, 2032, incremental EV charging sales must be included in gross annual retail energy sales.

Who Would Be Affected

  • Electric Utilities in Minnesota: Utilities would adjust the calculation of gross annual retail energy sales to exclude certain electric sales to qualifying data centers.
  • Data Centers / Data Mining Facilities: Large data centers and data mining facilities that meet the 40% peak demand criterion and submit verification letters could be excluded from gross sales reporting, potentially reducing the utility’s reported electric sales for regulatory and planning purposes.
  • Consumers/Ratepayers: Potential indirect effects on utility revenue requirements, rate design, and energy efficiency program incentives (as gross sales baselines change).
  • Public Utilities and Department of Commerce: Departments involved in administering the exclusions, including verification processes and methodology development for EV charging exclusions.

Timelines and Procedural Aspects

  • Effective Date: Not specified in the text provided; typical Minnesota bills establish effective dates via the enacted statute after passage.
  • Verification Requirement: Data centers must submit a signed verification letter to the utility confirming they meet the data center definition.
  • Peak Demand Threshold: Exclusion applies if a facility’s peak demand is 40% or greater of the utility’s system peak demand (as measured for billing).
  • EV Charging Exclusion Deadline: The EV charging exclusion methodology must be developed no later than December 31, 2021 (existing text), with incremental EV sales to be included after December 31, 2032; this aspect remains in the statute but would be re-evaluated in context of the new OCT law.
  • Legislative Process: The bill was introduced and referred to the Energy Finance and Policy committee on May 5, 2025.

Potential Impacts and Considerations

  • Policy Aim: Align energy reporting and conservation programs with the needs of high-demand data centers, potentially encouraging data center growth without increasing reported electric sales.
  • Regulatory Impacts: Utilities may need to adjust reporting, savings calculations, and demand-side program baselines when excluding eligible data centers.
  • Economic/Industrial Impact: Large data centers could benefit from a lower apparent gross sales baseline, which may influence incentives, tariffs, or planning decisions at the utility level.
  • Equity and Data Center Growth: The exemption targets a specific, energy-intensive sector; stakeholders may weigh the distributional effects across ratepayers and the broader energy policy goals.

If you’d like, I can compare HF 3296’s proposed exclusions to current Minnesota law (216B.2402, subd. 10) and provide a side-by-side impact analysis, including potential fiscal effects for a representative utility.

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

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