Demand and Data Centers

Co-op load forecasts and associated resources do NOT include hyperscale data centers.

Sioux Valley Energy and its transmission and power suppliers are investing in additional infrastructure to support “legacy members” just like you, the residential, farm and small businesses who use electricity. The resources being constructed include things like larger (and more) distribution and transmission lines along with a new natural gas power plant to support the growing demand placed on the grid by our members who are using more electricity and members who do things like build new homes, add onto businesses or add electric motors on the farm. 

If a hyperscale data center wanted to locate within the Cooperative’s service territory, it would need to pay its own way as required by Sioux Valley’s wholesale power supplier’s ‘Large Load Commercial Program.’ Under the program, hyperscale data centers would be responsible for the infrastructure costs needed to support it, helping insulate existing cooperative members from financial risk. 

Sioux Valley Energy has a legal obligation to serve members within its service territory.

The Cooperative doesn’t get to pick and choose which members it serves when they locate within our defined service territory. If a hyperscale data center can meet the obligations of the required ‘Large Load Commercial Program,’ procure the necessary transmission and power, and fulfill all local and state requirements, Sioux Valley Energy will be required to serve that data center. Even if all these qualifications are met, the timeline necessary for the entire process would be lengthy.

Demand charges are not new.

Approximately half of Sioux Valley Energy’s current power bill from its suppliers stems from demand charges and depending on the time of year, 50 to 70 percent of that demand is caused by residential and general service members. Sioux Valley Energy’s large power members have paid a separate demand charge for many years. The upcoming billing component change in 2027 will impact residential and general service members who are currently billed based on two components—energy (kwh) and basic service. In the past, demand was blended into the two-part rate structure. In 2027, demand will be broken out, and members will be billed based on three components: energy (kWh), demand (kW), and basic service.

Consumer electrical use patterns and technology have changed over the years. 

The electrical system has to be built to meet the highest demand at any given point in time. In years’ past the electrical use patterns of Sioux Valley Energy members were very similar—today, that is not the case. We are seeing higher and more varied electrical demand than ever before.  Members who use a greater amount of electricity all at one time drive costs up, because that peak demand requires infrastructure upgrades and results in higher power bills from our suppliers. It is important that those who cause the cost, pay for the cost – covering the actual demand they use. Technology has also played a role in Sioux Valley Energy’s ability to measure individual demand with improved metering systems.

We will continue to communicate transparently and help our members learn how these upcoming billing changes may impact them.

We are planning to continue the demand education process throughout 2026, including an online webinar and in-person learning sessions that will be held in each of the Cooperative’s 10 districts. We are here to answer your questions and will continue to share information about specific rates for each of the billing components as we are able which will likely be this fall.