As an energy exporter blessed with abundant supply, North Dakota consistently ranks among the cheapest states in the country when it comes to residential, commercial and industrial electricity rates.
Exploding costs of transmission, the buildout and replacement of transmission infrastructure, and the increase in energy load have helped push residential electricity prices modestly higher in recent years, however.
Average residential rates increased nearly 30% in the state between 2020 and 2024.
A recent study by Lawrence Berkeley National Laboratory showed North Dakota actually had the largest decrease in average retail industrial and commercial electricity prices in the country over that span, with flat or slightly lower rates for residential users, when adjusted for inflation.
Most of the real cost rise is due to the increased expense of transmission as well as materials, buildouts, generation and transportation needed to keep up with energy demand and to replace aging systems.
Take transformers for example: They cost 70% to 100% more now than five years ago, according to International Energy Agency data. Aluminum and copper wiring is up to 50% more costly. Labor costs have also increased by around 20% to 40%.
“Four or five years ago, it was $400,000 a mile to build a transmission line. Now it’s $2 million a mile,” said Josh Kramer, executive vice president and general manager at the North Dakota Association of Rural Electric Cooperatives. “Generation used to cost about $800 a kilowatt. Now, it’s $2,700 a kilowatt.”
The cost of nearly every input into the energy transmission and maintenance system rose, on average, as much as 50%, he said.
State Sen. Dale Patten (R-Watford City) said replacement and upgrade costs of infrastructure are a key component, particularly to improve resilience against severe weather events in rural areas.
“A lot of the existing infrastructure is old, 50, 60, 70 years old in some cases, and the cost of replacing it is not cheap,” said Patten, who chairs the N.D. Senate Energy and Natural Resources Committee.
MANAGING LARGE LOADS
Adding large loads onto the grid across the country in this time of increasing costs has spiked energy prices in most other locations.
So far, North Dakota has dodged that for the most part, even as its lower electricity rates are attractive to industrial operations looking to add large loads into the system.
Large loads can include everything from operations such as data centers, to oil refineries, to agricultural processing facilities and even the Capitol complex in Bismarck. Currently, there are 23 larger data centers in North Dakota.
When it comes to data centers, North Dakota has managed to add those large loads without jacking up electricity prices for consumers.
There are concerns about whether that can continue to be the case.
Managing that going forward will be a challenge for the Public Service Commission and legislators.
State Rep. Anna Novak (R-Hazen) is currently leading the Legislature’s Interim Energy Development and Transmission Committee to study large loads such as data centers and try to find a way to balance attracting those projects without overburdening other electricity consumers.
“We need to strike a balance of making sure that we're open for business, but that we have a strong vetting process,” Novak said. “I think that the vetting process is getting better.”
INSULATING CONSUMERS FROM COSTS
Investor-owned utilities like Montana-Dakota Utilities (MDU) as well as electric cooperatives like Basin Electric Power Cooperative and Minnkota Power Cooperative are trying to figure out how to manage large loads going forward.
Basin Electric adopted a large load program in June to minimize rate impacts for cooperative members and reduce the risk of stranded assets that come with single projects looking for 50, 100 or more megawatts of power in the future. Minnkota Power has also adopted a similar policy.
“So, when we have those inquiries coming in, whether it's a large tech company or a large industrial load, we’re saying we want to serve you, but to do that you’re going to have to bear the costs associated with it,” Kramer said. “That goes for if they need to add more infrastructure or generation or engineering studies.”
MDU’s Darcy Neigum said the company doesn’t have a formal policy yet, but the uptick in interest in adding large loads may necessitate one.
“We do have a process we go through, and we're kind of formalizing some of that, because there are just so many requests,” Neigum said.
One delicate aspect in all of this is implementing policies that protect consumers or co-op members from additional costs without scaring quality projects away from the state.
Kramer said that’s not necessarily a bad thing.
“It’s probably helped separate the wheat from the chaff a bit,” Kramer said.
This story was edited for space. Read the full story online at newscoopnd.org.
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Michael Standaert is a reporter for the North Dakota News Cooperative (NDNC), a nonprofit news organization providing reliable and independent reporting on issues and events that impact the lives of North Dakotans. The organization increases the public’s access to quality journalism and advances news literacy across the state. Learn more at newscoopnd.org. Send comments, suggestions or tips to michael@newscoopnd.org.
