Tim McCarthy
Sioux Valley Energy
General Manager/
Chief Executive Officer
Managing Data Center Load Growth Responsibly
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Sioux Valley Energy continues to experience strong growth each year due to new residential and commercial members moving to our service territory. This demand is being driven by our “legacy” members (residential, farm, commercial, etc.). To meet our legacy members’ current and future electrical demand, our power suppliers need to build more generation and transmission and this comes at a cost.
We have received several questions as to whether hyperscale large loads are driving Sioux Valley Energy’s 2026 rate increase. The answer to that question is no. The rate increase is directly tied to investing in power supply resources that will serve our legacy members.
Sioux Valley Energy does not currently serve any hyperscale large data centers nor do we have any under contract. However, like most utilities, the Cooperative is frequently contacted by developers interested in building hyperscale loads such as data centers in our service territory.
While these new hyperscale data centers bring potential opportunities to strengthen our local economies, they must be handled responsibly. Protecting our legacy members is our top priority. Our approach is rooted in “cost causation”—this simply means that those who cause the cost should pay the cost. This philosophy will help ensure that our legacy members are not negatively impacted by the infrastructure investments required to serve hyperscale data centers.
The electric grid that powers our homes and businesses is part of a vast, interconnected network. This means that growth in electricity demand—whether here in South Dakota or in another state—affects supply and demand for everyone on the bulk electric grid. This is why Sioux Valley Energy’s bulk wholesale power provider, Basin Electric, has developed a special program for hyperscale loads.
Basin Electric’s Large Load Program is built on the principle of fairness and member protection. The program ensures that new, high-demand members—such as hyperscale data centers—pay their fair share of the costs required to serve them, so our existing members are shielded from additional infrastructure expenses. By establishing a transparent and consistent process for reviewing hyperscale projects, the program allows us to welcome new opportunities while protecting our legacy members.
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Basin’s new large load program is a perfect example of the cooperative difference in action. We are not driven by profit margins for distant shareholders; we are driven by a commitment to deliver reliable and equitable service to you. This large load program ensures that as our horizon expands, our foundation remains solid and our members are protected. We are coming together to protect our members while preparing for the future.