Shakopee Public Utilities presents AMI updates and large-load pilot proposal as council raises data-center concerns

Shakopee Public Utilities (SPU) presented a year-in-review to the city council and the SPU commission on March 17, summarizing meter upgrades, infrastructure projects and a proposed amendment to pilot/franchise-fee terms for very large electric customers.

Trent, the SPU presenter, said the utility is near completion of its advanced metering infrastructure (AMI) rollout with three customers remaining on legacy meters. He said SPU adopted an opt-out policy for customers who decline AMI and that staff calculated the manual-read fee at $75 per month to cover labor and travel costs to collect readings manually. “We charge an extra fee… it was about 45 minutes worth of work and that’s how we got to that number,” Trent said.

Trent reviewed other items including a specialty-painted water tower that carried an $80,000 upcharge compared with a standard repaint (a standard repaint was described in the presentation as roughly $1.1–$1.7 million), expanded leak-detection capabilities, PFAS and emerging-contaminant monitoring (he said results remain below regulatory thresholds), upgraded substations and a policy for load shedding coordinated with MISO that would involve rotating customers to shed up to 5 megawatts to protect the transmission system.

SPU and city staff then discussed a proposed amendment to payment-in-lieu-of-taxes/pilot terms for very large customers (the utility called the cutoff “above 10 megawatts” as a working threshold). Trent and staff described a draft formula that would apply roughly a 6% pilot on the first $1,500,000 of gross revenue and 1% on amounts above that level, citing comparisons with Xcel Energy’s franchise structure that charges 3% up to a threshold and 0.5% thereafter.

Trent said the pilot is intended to make SPU competitive for large users while recovering costs associated with serving concentrated high loads. He said a single large building at ultimate build-out could still generate about $390,000 in pilot payments to the city annually even with reduced rates on portions above the threshold.

Council members asked detailed questions about who would benefit, potential rate impacts on residential customers, the utility’s overall system capacity and whether the amendment is a tool to recruit data centers. Trent and commissioners said the proposal is not limited to data centers and that the utility would require major customers to pay for needed infrastructure — such as transformers or substations — rather than passing those capital costs to existing ratepayers.

Councilor Whiting expressed concern about subsidizing large energy users and urged caution before adopting terms that might disadvantage residential ratepayers. Staff and commissioners pointed to fairness with Xcel customers in the area and to the length of time needed to add substation capacity — up to several years — and to contractual and transmission constraints that may limit the size of customers the system can reliably serve.

No formal action was taken on the proposed pilot; SPU commissioners said any amendment to franchise or pilot terms would require approval by both the utility board and the city council. Staff said they will bring additional materials, including the existing Xcel agreement, to a future meeting for more detailed review.

Separately, Scott County Commissioner Jody Bridal, speaking during public comment, told the council the county has no recorded instances of mortgage theft or mortgage fraud and encouraged residents to sign up for county property-watch alerts on the land records website.

The joint session of SPU and the council adjourned and the council resumed its agenda.