An Act to update provisions related to certain large-use customers of utilities.

Be it enacted by the Legislature of the State of South Dakota:

Section 1. That a NEW SECTION be added to chapter 46-1:

A large-use customer, as defined in section 2 of this Act, which is operating as a data center, shall provide notice to and cooperate with each local water provider to ensure that projected water consumption is compatible with the water supply in the area in which the customer is located. In addition, the customer:

(1) Must implement closed-loop cooling technology that limits net water withdrawal to a daily amount, established by the Water Management Board for each source of water currently used in the state, by rule promulgated pursuant to chapter 1-26;

(2) May not consume an amount of the available water supply in the local service area exceeding limits established in rule by the board, after allocation to residential and essential public services; and

(3) In a water shortage, as declared by the Governor or determined by the board, must reduce water use until all residential and essential public service allocations are met.

In establishing limits under this section, the board shall seek to ensure water availability and prevent disproportionate use of water by the customer.

The customer shall submit to the board a quarterly report, in the form and manner prescribed by the board, of the customer's water use. The report must contain average usage data and certification of compliance with this section. The board shall make the usage data contained in the report available to the public.

For purposes of this section, "closed-loop cooling technology" means a sealed system that continuously cycles a set volume of liquid through a closed circuit in which the liquid, after absorbing heat, is chilled and recirculated.

For purposes of this section, "data center" means a centralized repository for the dissemination, management, processing, and storage of electronic data and information.

Section 2. That § 49-1A-3 be AMENDED:

49-1A-3. There is hereby levied on each public utility, as defined in subdivision 49-34A-1(12) § 49-34A-1, which is subject to the rate regulation of the commission, and all each telecommunications companies company, as defined in subdivision 49-31-1(26) § 49-31-1, a tax of not more than .0015 or two hundred fifty dollars, whichever is greater, upon the annual intrastate gross receipts derived by the public utility or telecommunications company from its customers within the State of South Dakota this state during the preceding calendar year. The two hundred fifty dollar minimum gross receipt tax does not apply to telecommunications companies providing local exchange service, as defined in subdivision 49-31‑1(13) § 49-31-1, or to radio common carriers.

Section 3. That § 49-34A-1 be AMENDED:

49-34A-1. Terms used in this chapter mean:

(1) "Assigned service area," the geographical area in which the boundaries are established as provided in §§ 49-34A-42 to 49-34A-44, inclusive, and 49-34A-48 to 49-34A-59, inclusive;

(2) "Commission," the South Dakota Public Utilities Commission of the State of South Dakota;

(3) "Customer," any person contracting for or purchasing gas or electric service from a utility;

(4) "Depreciated original cost," the cost of property to the person first devoting it to public service, less the depreciation reserve, which includes accumulated depreciation charges calculated on a straight-line method and based upon the estimated service life of the property, together with other items normally accounted for in the depreciation reserve, and but does not include any good will or, going concern value, nor does it include or certificate value in excess of payments made or costs incurred in the initial acquisition thereof;

(5) "Electric line," any line for conducting electric energy at a design voltage of twenty-five thousand volts phase to phase or less and used for distributing electric energy directly to customers;

(6) "Electric service," electric service furnished to a customer for ultimate consumption, but not including wholesale electric service furnished by an electric utility to another electric utility for resale;

(7) "Electric utility," any person operating, maintaining, or controlling, maintaining, or operating, in this state, equipment or facilities for providing electric service to or for the public, including facilities owned by a municipality;

(8) "Gas service," retail sale of natural gas or manufactured gas distributed through a pipeline to fifty or more customers or the sale of transportation services by an intrastate natural gas pipeline;

(9) "Gas utility," any person operating, maintaining, or controlling, maintaining, or operating, in this state, equipment or facilities for providing gas service to or for the public;

(9A)(10) "Incremental costs," all costs incurred by a public utility, which are directly attributable to a large-use customer and incurred in addition to the normal costs of providing service to other existing customers;

(11) "Intrastate natural gas pipeline," any natural gas pipeline located entirely within the state that, which transports gas from a receipt point to one or more locations for customers other than the pipeline operator. However, provided that the term does not apply if:

(a) If there is only one customer and the customer is a wholly-owned wholly owned subsidiary of the pipeline operator,;

(b) If the customer is the parent company of the pipeline operator, or;

(c) If the customer and the pipeline operator are wholly-owned wholly owned subsidiaries of the same parent company. Further, the term does not apply to; or

(d) To natural gas lines and appurtenant facilities used to gather gas from natural gas production facilities or sites and move the gas to an interconnecting transportation pipeline system;

(10)(12) "Large-use customer," a customer, established after July 1, 2026, which requires electric service with a contracted demand of two thousand kilowatts or more;

(13) "Municipality," any incorporated town or city in South Dakota this state;

(11)(14) "Person," a natural person, a partnership, a private corporation, a public corporation, a limited liability company, a municipality, an association, a cooperative whether incorporated or not, a joint stock association, a business trust, any of the federal, state and local governments, including any of their political subdivisions, agencies and instrumentalities, an association; business trust; cooperative, whether or not incorporated; federal, state, or local government or any agency, instrumentality, or political subdivision thereof; joint stock association; limited liability company; natural person; partnership; private or public corporation; or two or more persons having joint or common interest;

(12)(15) "Public utility," any person operating, maintaining, or controlling, maintaining, or operating, in this state, equipment or facilities for the purpose of providing gas or electric service to or for the public, in whole or in part, in this state. However, provided that the term does not apply to an:

(a) An electric or gas utility owned by a municipality, political subdivision, or agency of the State of South Dakota this or any other state or a;

(b) A rural electric cooperative as defined in § 47-21-1 for the purposes of §§ 49-34A-2 to 49-34A-4, inclusive, §§ 49-34A-6 to 49-34A-41, inclusive, and § 49-34A-62. The term, public utility, does apply to a; or

(c) A rural electric cooperative which that provides gas service;

(13)(16) "Rate," any charge, classification, or compensation, charge and classification, or any of them demanded, observed, charged, or collected, demanded, imposed, or observed by any public utility for any service and any rules, regulations, practices, or contracts contract, practice, regulation, or rule affecting any such compensation, the charge or, classification, or compensation; and

(14)(17) "Securities," stock and stock certificates or other evidence of interest or ownership, and bonds, notes, or other evidence of indebtedness.

Section 4. That a NEW SECTION be added to chapter 49-34A:

Each public utility shall establish a classification of service, with its own tariff and schedules, for large-use customers, which must be separate and distinct from classifications of service for other customers.

A tariff established pursuant to this section:

(1) Must allocate incremental costs in a manner that:

(a) Is proportional to each large-use customer's share of the aggregated incremental costs of all large-use customers served by the utility; and

(b) Does not include the incremental costs of a large-use customer with a contracted rate established pursuant to section 6 of this Act;

(2) May not impose on other customers any rate increase or surcharge that is directly attributable to the utility usage of a large-use customer; and

(3) Together with related schedules, is subject to commission approval and public inspection pursuant to § 49-34A-10.

Pursuant to chapter 1-26, the commission shall promulgate rules for determining incremental costs on a cost-causation basis and may require a large-use customer to submit periodic reports of the large-use customer's actual and projected utility consumption, which may be used by the commission to verify the large-use customer's share of the total incremental costs. The commission may require the large-use customer to reimburse the commission for the retention of experts and any other costs incurred by the commission to determine cost impacts and review proposed tariffs pursuant to this section.

Section 5. That § 49-34A-56 be AMENDED:

49-34A-56. Notwithstanding the establishment of assigned service areas for electric utilities provided for in §§ 49-34A-43 and 49-34A-44, new customers at new locations which develop after March 21, 1975, located outside municipalities as the boundaries thereof existed on March 21, 1975, and who require electric service with a contracted minimum demand of two thousand kilowatts or more shall not be a new large-use customer at a new location outside the existing boundary of a municipality is not obligated to take electric service from the electric utility having the assigned service area where the customer is located if, after notice and hearing, the Public Utilities Commission the commission so determines, after notice, hearing, and consideration of the following factors:

(1) The electric service requirements of the load to be served;

(2) The availability of an adequate power supply;

(3) The development or improvement of the electric system of the utility seeking to provide the electric service, including the economic factors relating thereto;

(4) The proximity of adequate facilities from which electric service of the type required may be delivered;

(5) The preference of the large-use customer; and

(6) Any and all pertinent factors affecting the ability of the utility to furnish adequate electric service to fulfill customers' the requirements of all customers.

Section 6. That a NEW SECTION be added to chapter 49-34A:

Notwithstanding the requirements of section 4 of this Act, any large-use customer may negotiate with an electric utility provider a rate for electric service and enter into a written contract that:

(1) Specifies the duration of the contract and the estimated start date of the electric service;

(2) Obligates the large-use customer to pay a minimum amount or a percentage based on the large-use customer's projected usage of the electric service that the electric utility is contracted to provide for the duration of the contract;

(3) Does not shift incremental costs to other customers;

(4) Does not result in any subsidization by other customers; and

(5) Requires the large-use customer to report to the commission and the electric utility, at least annually, the following information:

(a) The large-use customer's total electric usage during the reporting period; and

(b) The large-use customer's projected electric usage for twelve consecutive months following the reporting period.

Any report submitted pursuant to this section is available for public inspection, except that the large-use customer's proprietary information and trade secrets, as defined in § 1-27-28, and other sensitive information or data, as described in § 1-27-1.6, are confidential.

A contracted rate established pursuant to this section does not violate § 49-34A-3 if, after consideration of the factors in § 49-34A-56, the commission approves the contract and determines the contract is in the public interest.

Section 7. That a NEW SECTION be added to chapter 49-34A:

If an electric utility declares an energy shortage or forecasts that peak demand is projected to exceed supply, each large-use customer of the utility must curtail electric usage until the electric utility determines the total demand for residential customers and essential public services is met.