How the US-Iran War affects energy in Minnesota

As the US-Iran war impacts energy markets across the globe, Community Power has been exploring the potential consequences and opportunities opened by the crisis. A new report by our fellow, Atticus Friendly, outlines some of the expected effects of this global oil crisis, both internationally, in the United States and Minnesota. In particular, it outlines an increase in global energy prices, consumer goods prices, and global food shortages. It hurts Minnesota farmers as prices for fuel and fertilizer spike. All of this points towards slower economic growth and higher inflation. Atticus cites the history of oil crises in the 1970s, and other economic parallels to explore plausible outcomes and opportunities for energy reform opened by the catastrophe.

The Data Center boom ties in with monopoly utilities increasing shareholder profits by overcharging captive customers. Does that apply to Minnesota? 

 There is growing concern nationwide about data centers because just one building could consume as much power as a mid-sized city. In Georgia, people’s wells dried up because a data center drew from the same aquifer to cool its computer equipment. It also gives mining companies a justification to extract from the Boundary Waters because GPU components need to be replaced across the life of a data center. Elon Musk's massive xAI data center in Memphis echoes old patterns of environmental racism. On top of it all, data center companies in Minnesota use nondisclosure agreements (NDAs) so that local government officials can't tell residents about proposed data center projects and the impacts it would have on the public. The State Legislature failed to pass a bill to ban the use of NDAs.

Where does Community Power and our focus on energy democracy fit in? (See Community Power staff on Fox 9.)

Here is some further context which that brief clip could not cover: 

On the one hand, the increased electricity demand from new data centers will require more of the type of power grid infrastructure investments that electric utilities receive guaranteed profits from, while ordinary households are typically left paying the tab. For example, Minnesota Power has asked the MN PUC for permission to build a new gas plant for data centers. And that sounds like more of the same: another way for monopoly utilities to overcharge captive customers to increase shareholder profits.

On the other hand, some argue that the data center boom could provide the perfect impetus for grid modernization that will benefit all ratepayers. Sounds lovely, but seeing is believing.

Community Power founding board member John Farrell laid out that out in his article “We aren’t ready for AI: The energy debate we need to have” along with some parallels between tech monopolies and investor-owned utilities, writing that both “deal in public handouts, receive special deals, and sidestep public oversight.”

At the very least, sensible policies must be in place to shield ratepayers from increased electric bills such as data center companies being required to pay for the grid upgrades and other costs of their energy use. 

In 2025 Minnesota passed a law aiming to shield ratepayers from the costs of providing power to serve large new data centers above 100 MW. The MN Minnesota Public Utilities Commission took a crucial step to implement these protections.

But proposed laws to set a regulatory framework for data centers didn't make it through this year. So, it will be up to local governments to set standards for smaller data centers. For context, consider that the Sleep Number data center in downtown Minneapolis and another proposed by Sherman Associates on 2nd and Washington, that have been in the news, are around 20 MW. But if enough smaller data centers are co-located, it could add up to the footprint of a hyperscale data center, the type used for generative AI.

That segues into the big question. We see a pattern of large tech companies and billionaire investors benefiting from data center growth while local communities and our environment are left to bear the costs. But to what extent does that apply to Minneapolis locally?   

 Minneapolis City Council held a 2-hour debate on a data center pause & set a June 16th public hearing for you to weigh in! 

The Minneapolis City Council held a spirited 2-hour discussion on data centers last Thursday. Then, in an 8-5 vote, they gave initial approval to a 6-month pause on data center development. It was amended by Ward 6 Council Member Jamal Osman (who voted in favor of the pause) to allow for data center development in the downtown core for new sites up to 350,000 sq ft.  

Many council members (CMs) publicly shared their views on the topic well before the vote. On May 13th, for example, Ward 12 CM Aurin Chowdhury, the author of the pause, hosted a community meeting on the issue. She expressed the view that a pause is necessary to give the city the leverage needed to achieve a regulatory framework to protect the public interest. 

CMs Rainville (in his Ward 3 Newsletter) and Shaffer (in her Ward 7 Newsletter and in her Star Tribune op-ed) have expressed concern that the pause would hinder the potential for smaller scale data centers, (like the Sleep Number building), to revitalize downtown Minneapolis and its tax base. In other interviews, CM Rainville explained that there are about fifteen smaller data centers already operating in downtown Minneapolis, for decades in certain cases- implying that concerns from the high-profile stories we hear about hyper-scale data centers should not be conflated at the local level. 

(Photo: CMs Rainville and Osman tour downtown data center.) 

Council Member Soren Stevenson also included a section on data centers in his Ward 8 newsletter, and on Thursday cited hearing from numerous constituents who want no data center development locally rather than a temporary pause. 

The council did unanimously pass a directive for our Legislative Research department to produce a comprehensive policy report on data centers.

This debate is far from over. 

Procedurally, this pause has to be voted on again by the full council on June 25th but is in effect in the meantime. If it passes, it will go to the mayor for his signature or veto. Additional data center legislation will also likely be up for a vote.  

Your chance to weigh in!

The City Council will hold a public hearing where you can share your thoughts about the pause or data center regulation in the city at a session of the Business, Housing & Zoning Committee. It will be at 1:30 PM, June 16th at the council chambers. 

In our view, we must insist that the data center companies: 

1. Pay money into city climate and equity programs. 
2. Use renewable power to meet all of their energy needs (to comply with Minnesota's carbon-free electricity law).
3. Adopt circular or closed-loop water management and adhere to strict heat discharge regulations rather than evaporative cooling. 
4. Send waste heat into thermal energy networks (TENs) to other buildings which could use it. TENs was the main topic of discussion at the May 18th Minneapolis Clean Energy Partnership board meeting. 

Our Co-Executive Director who has helped us greatly with finances and HR the past three years, Leticia Jones, has decided to move on from Community Power this month. We wish her the best of luck in all her new endeavors and hope she stops by from time to time to say hello.

As she continues to assist us in ensuring a smooth transition, we have yet to say "goodbye," but understand that people and opportunities change.

Best to you Leticia! 

Additional Upcoming Events:

Come see the June 4th Webinar! "Tools for Local Energy Action Under Federal Rollbacks" 

One of the three speakers will include former City Council member Katie Cashman, who will discuss utility franchise negotiations in Minneapolis. It is hosted by the Institute for Local Self Reliance and will take place at 12:30 PM CT.

Queer + Environmental Trivia Night hosted by the Climate Justice Committee (CJC)

Kick off Pride Month the evening of Saturday June 6th at 6 PM. Come by to win fun prizes & learn some movement history! CJC is a purely grassroots group organizing action on local environmental justice. 

It will be at the Lucy Parson Center 4100 28th Ave S. Minneapolis. 

The Citizen's Utility Board (CUB) Annual Celebration

Come support our partner organization CUB as in their ongoing mission to fight back against excessive rate increases and corporate profits plus building the path for an affordable and equitable clean energy transition.

There are options for discounted or free tickets to ensure price isn’t a barrier and a full meal is included!  

Additional Articles:

Legislature OKs last $4M for Minneapolis Roof Depot project

• The East Phillips Neighborhood Institute finally has a clear path to purchasing the site after funding was included in the MN State Legislature’s bonding bill.

Tucson, AZ secures $2 million per year commitment from utility *shareholders* for local investment in clean, affordable energy due to franchise negotiations.

• The recent public power campaign made this happen (and would still be superior)
• Tucson Sentinel, Apr 9, 2026