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26.250.24 101st Legislative Session 128
2026 South Dakota Legislature
Senate Bill 128
Introduced by: Senator Howard
Underscores indicate new language.
Overstrikes indicate deleted language.
An Act to update provisions related to certain large-use customers of utilities. 1
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 2
Section 1. That a NEW SECTION be added to chapter 46-1: 3
A large-use customer, as defined in section 2 of this Act, which is operating as a 4
data center, shall provide notice to and cooperate with each local water provider to ensure 5
that projected water consumption is compatible with the water supply in the area in which 6
the customer is located. In addition, the customer: 7
(1) Must implement closed-loop cooling technology that limits net water withdrawal to 8
a daily amount, established by the Water Management Board for each source of 9
water currently used in the state, by rule promulgated pursuant to chapter 1-26; 10
(2) May not consume an amount of the available water supply in the local service area 11
exceeding limits established in rule by the board, after allocation to residential and 12
essential public services; and 13
(3) In a water shortage, as declared by the Governor or determined by the board, 14
must reduce water use until all residential and essential public service allocations 15
are met. 16
In establishing limits under this section, the board shall seek to ensure water 17
availability and prevent disproportionate use of water by the customer. 18
The customer shall submit to the board a quarterly report, in the form and manner 19
prescribed by the board, of the customer's water use. The report must contain average 20
usage data and certification of compliance with this section. The board shall make the 21
usage data contained in the report available to the public. 22
For purposes of this section, "closed -loop cooling technology" means a sealed 23
system that continuously cycles a set volume of liquid through a closed circuit in which 24
the liquid, after absorbing heat, is chilled and recirculated. 25
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For purposes of this section, "data center" means a centralized repository for the 1
dissemination, management, processing, and storage of electronic data and information . 2
Section 2. That § 49-1A-3 be AMENDED: 3
49-1A-3. There is hereby levied on each public utility , as defined in subdivision 4
49-34A-1(12) § 49-34A-1, which is subject to the rate regulation of the commission, and 5
all each telecommunications companies company, as defined in subdivision 49-31-1(26) 6
§ 49-31-1, a tax of not more than .0015 or two hundred fifty dollars, whichever is greater, 7
upon the annual intrastate gross receipts derived by the public utility or 8
telecommunications company from its customers within the State of South Dakota this 9
state during the preceding calendar year. The two hundred fifty dollar minimum gross 10
receipt tax does not apply to telecommunications companies providing local exchange 11
service, as defined in subdivision 49-31-1(13) § 49-31-1, or to radio common carriers. 12
Section 3. That § 49-34A-1 be AMENDED: 13
49-34A-1. Terms used in this chapter mean: 14
(1) "Assigned service area," the geographical area in which the boundaries are 15
established as provided in §§ 49-34A-42 to 49-34A-44, inclusive, and 49-34A-48 16
to 49-34A-59, inclusive; 17
(2) "Commission," the South Dakota Public Utilities Commission of the State of South 18
Dakota; 19
(3) "Customer," any person contracting for or purchasing gas or electric service from 20
a utility; 21
(4) "Depreciated original cost," the cost of property to the person first devoting it to 22
public service, less the depreciation reserve, which includes accumulated 23
depreciation charges calculated on a straight -line method and based upon the 24
estimated service life of the property , together with other items normally 25
accounted for in the depreciation reserve, and but does not include any good will 26
or, going concern value, nor does it include or certificate value in excess of 27
payments made or costs incurred in the initial acquisition thereof; 28
(5) "Electric line," any line for conducting electric energy at a design voltage of twenty-29
five thousand volts phase to phase or less and used for distributing electric energy 30
directly to customers; 31
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(6) "Electric service," electric service furnished to a customer for ultimate 1
consumption, but not including wholesale electric service furnished by an electric 2
utility to another electric utility for resale; 3
(7) "Electric utility," any person operating, maintaining, or controlling, maintaining, or 4
operating, in this state, equipment or facilities for providing electric service to or 5
for the public, including facilities owned by a municipality; 6
(8) "Gas service," retail sale of natural gas or manufactured gas distributed through a 7
pipeline to fifty or more customers or the sale of transportation services by an 8
intrastate natural gas pipeline; 9
(9) "Gas utility," any person operating, maintaining, or controlling, maintaining, or 10
operating, in this state, equipment or facilities for providing gas service to or for 11
the public; 12
(9A)(10) "Incremental costs," all costs incurred by a public utility, which are directly 13
attributable to a large -use customer and incurred in addition to the normal costs 14
of providing service to other existing customers; 15
(11) "Intrastate natural gas pipeline," any natural gas pipeline located entirely within 16
the state that, which transports gas from a receipt point to one or more locations 17
for customers other than the pipeline operator . However, provided that the term 18
does not apply if: 19
(a) If there is only one customer and the customer is a wholly-owned wholly 20
owned subsidiary of the pipeline operator,; 21
(b) If the customer is the parent company of the pipeline operator, or; 22
(c) If the customer and the pipeline operator are wholly-owned wholly owned 23
subsidiaries of the same parent company. Further, the term does not apply 24
to; or 25
(d) To natural gas lines and appurtenant facilities used to gather gas from 26
natural gas production facilities or sites and move the gas to an 27
interconnecting transportation pipeline system; 28
(10)(12) "Large-use customer," a customer, established after July 1, 2026, which 29
requires electric service with a contracted demand of two thousand kilowatts or 30
more; 31
(13) "Municipality," any incorporated town or city in South Dakota this state; 32
(11)(14) "Person," a natural person, a partnership, a private corporation, a public 33
corporation, a limited liability company, a municipality, an association, a 34
cooperative whether incorporated or not, a joint stock association, a business trust, 35
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any of the federal, state and local governments, including any of their political 1
subdivisions, agencies and instrumentalities, an association; business trust; 2
cooperative, whether or not incorporated; federal, state, or local government or 3
any agency, instrumentality, or political subdivision thereof; joint stock 4
association; limited liability company; natural person; partnership; private or 5
public corporation; or two or more persons having joint or common interest; 6
(12)(15) "Public utility," any person operating, maintaining, or controlling, maintaining, 7
or operating, in this state, equipment or facilities for the purpose of providing gas 8
or electric service to or for the public , in whole or in part, in this state . However, 9
provided that the term does not apply to an: 10
(a) An electric or gas utility owned by a municipality, political subdivision, or 11
agency of the State of South Dakota this or any other state or a; 12
(b) A rural electric cooperative as defined in § 47-21-1 for the purposes of 13
§§ 49-34A-2 to 49-34A-4, inclusive, §§ 49-34A-6 to 49-34A-41, inclusive, 14
and § 49-34A-62. The term, public utility, does apply to a; or 15
(c) A rural electric cooperative which that provides gas service; 16
(13)(16) "Rate," any charge, classification, or compensation, charge and classification, 17
or any of them demanded, observed, charged, or collected, demanded, imposed, 18
or observed by any public utility for any service and any rules, regulations, 19
practices, or contracts contract, practice, regulation, or rule affecting any such 20
compensation, the charge or, classification, or compensation; and 21
(14)(17) "Securities," stock and stock certificates or other evidence of interest or 22
ownership, and bonds, notes, or other evidence of indebtedness. 23
Section 4. That a NEW SECTION be added to chapter 49-34A: 24
Each public utility shall establish a classification of service, with its own tariff and 25
schedules, for large -use customers, which must be separate and distinct from 26
classifications of service for other customers. 27
A tariff established pursuant to this section: 28
(1) Must allocate incremental costs in a manner that: 29
(a) Is proportional to each large -use customer's share of the aggregated 30
incremental costs of all large-use customers served by the utility; and 31
(b) Does not include the incremental costs of a large -use customer with a 32
contracted rate established pursuant to section 6 of this Act; 33
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(2) May not impose on other customers any rate increase or surcharge that is directly 1
attributable to the utility usage of a large-use customer; and 2
(3) Together with related schedules, is subject to commission approval and public 3
inspection pursuant to § 49-34A-10. 4
Pursuant to chapter 1-26, the commission shall promulgate rules for determining 5
incremental costs on a cost -causation basis and may require a large -use customer to 6
submit periodic reports of the large -use customer's actual and projected utility 7
consumption, which may be used by the commission to verify the large -use customer's 8
share of the total incremental costs. The commission may require the large-use customer 9
to reimburse the commission for the retention of experts and any other costs incurred by 10
the commission to determine cost impacts and review proposed tariffs pursuant to this 11
section. 12
Section 5. That § 49-34A-56 be AMENDED: 13
49-34A-56. Notwithstanding the establishment of assigned service areas for 14
electric utilities provided for in §§ 49-34A-43 and 49-34A-44, new customers at new 15
locations which develop after March 21, 1975, located outside municipalities as the 16
boundaries thereof existed on March 21, 1975, and who require electric service with a 17
contracted minimum demand of two thousand kilowatts or more shall not be a new large-18
use customer at a new location outside the existing boundary of a municipality is not 19
obligated to take electric service from the electric utility having the assigned service area 20
where the customer is located if, after notice and hearing, the Public Utilities Commission 21
the commission so determines, after notice, hearing, and consideration of the following 22
factors: 23
(1) The electric service requirements of the load to be served; 24
(2) The availability of an adequate power supply; 25
(3) The development or improvement of the electric system of the utility seeking to 26
provide the electric service, including the economic factors relating thereto; 27
(4) The proximity of adequate facilities from which electric service of the type required 28
may be delivered; 29
(5) The preference of the large-use customer; and 30
(6) Any and all pertinent factors affecting the ability of the utility to furnish adequate 31
electric service to fulfill customers' the requirements of all customers. 32
Section 6. That a NEW SECTION be added to chapter 49-34A: 33
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Notwithstanding the requirements of section 4 of this Act, any large-use customer 1
may negotiate with an electric utility provider a rate for electric service and enter into a 2
written contract that: 3
(1) Specifies the duration of the contract and the estimated start date of the electric 4
service; 5
(2) Obligates the large-use customer to pay a minimum amount or a percentage based 6
on the large-use customer's projected usage of the electric service that the electric 7
utility is contracted to provide for the duration of the contract; 8
(3) Does not shift incremental costs to other customers; 9
(4) Does not result in any subsidization by other customers; and 10
(5) Requires the large -use customer to report to the commission and the electric 11
utility, at least annually, the following information: 12
(a) The large-use customer's total electric usage during the reporting period; 13
and 14
(b) The large-use customer's projected electric usage for twelve consecutive 15
months following the reporting period. 16
Any report submitted pursuant to this section is available for public inspection, 17
except that the large-use customer's proprietary information and trade secrets, as defined 18
in § 1-27-28, and other sensitive information or data, as described in § 1-27-1.6, are 19
confidential. 20
A contracted rate established pursuant to this section does not violate § 49-34A-3 21
if, after consideration of the factors in § 49-34A-56, the commission approves the contract 22
and determines the contract is in the public interest. 23
Section 7. That a NEW SECTION be added to chapter 49-34A: 24
If an electric utility declares an energy shortage or forecasts that peak demand is 25
projected to exceed supply, each large -use customer of the utility must curtail electric 26
usage until the electric utility determines the total demand for residential customers and 27
essential public services is met. 28