North Dakota, Montana and three Southern states want to block a $22 billion plan for power lines across the Midwest that Minnesota says it needs to transition to carbon-free energy.

The states argue that the federal government should stop the grid upgrade because otherwise their customers will be paying higher rates to subsidize clean energy projects in other states.

But Xcel Energy, Minnesota’s largest electric utility, called the North Dakota complaint “utterly meritless.” Xcel and other Minnesota utilities argue the transmission projects are needed for a reliable grid as coal plants retire and new AI data centers, electric vehicles and appliances are causing a surge in demand.

The fight is the latest example of how basic grid infrastructure has become a partisan battleground at a pivotal moment for the U.S. energy system. As local energy priorities diverge, it’s straining the cooperation that’s essential for a regional grid that connects 15 states and Canada’s Manitoba province.

The intervention of Louisiana, Mississippi and Arkansas in the case particularly irked Minnesota’s top energy regulators.

“I don’t get involved in how they regulate in their states,” said Joe Sullivan, a Democrat who is vice chair of the Minnesota Public Utilities Commission. “Because it doesn’t affect me. Why are they messing around with our economic future?”

If the complaint led by North Dakota is successful, Minnesota “will be poorer and less economically vibrant,” Sullivan said. “It’s an economic attack on Minnesota.”

The regional grid operator, a nonprofit known as MISO, is planning five phases of long-distance transmission lines, in part to move the grid away from its traditional reliance on large fossil fuel plants close to cities.

Earlier this month in Becker, Great River Energy and Minnesota Power broke ground on the first project in a package approved by MISO in 2022. Workers poured concrete for the foundation of a utility pole, part of the “Northland Reliability” transmission line. It will eventually carry electricity generated by wind, solar and other sources more than 180 miles from central Minnesota to a substation near Grand Rapids.

“It is all about keeping the lights on and keeping the grid stable and safe,” said Priti Patel, who oversees transmission for Great River, which supplies energy to rural electric cooperatives throughout the state. “Especially during the coldest days in the winter.”

These projects improve the grid’s capability of sharing electricity, which helps if, for example, the wind is blowing in one part of the country but not another. It’s also crucial when demand for energy spikes in one part of the grid because of extreme weather, said Hwikwon Ham, a political independent on Minnesota’s PUC.

Xcel described the projects as “effectively creating the Eisenhower Interstate System for electricity for the region” in a letter to federal regulators.

North Dakota, Montana, Mississippi, Louisiana and Arkansas lodged their complaint in July with the Federal Energy Regulatory Commission (FERC). The states argued MISO’s calculations of benefits from the projects are overblown, and as a result, the cost paid by local utility customers would be unreasonable.

The states also object to paying for clean energy.

“If a state chooses to pursue ambitious decarbonization targets, it should also bear the financial responsibility for the infrastructure required to meet those goals,” said Sheri Haugen-Hoffart, a member of the North Dakota Public Service Commission, in an August news release.

North Dakota’s three members of Congress said in a letter to FERC that the benefits of the transmission lines largely flow to states with clean energy policies “but the costs are spread to everyone.”

“If a state can socialize the expense of distant generation hookups, it has less incentive to consider cheaper or more reliable solutions closer to home,” the letter says.

The North Dakota commission declined to comment beyond its original written statements.

MISO declined to make anyone available for an interview, but the organization says its research shows that for every dollar spent on the 24 projects, the new transmission will provide $1.80 to $3.50 in benefits. The plan was developed over years after more than 300 meetings.

In a letter to FERC, MISO also said it took feedback from North Dakota’s commission to “help ensure expanded energy delivery from their state as a leading energy exporter in the Midwest.” North Dakota exports renewable power, as well as natural gas, to the region through MISO.

North Dakotans and Montanans will “significantly benefit” for this round of transmission projects and help pay a “very small percentage of the costs,” according to MISO. Utility customers in Louisiana, Arkansas and Mississippi will pay nothing because the projects aren’t in their region.

Ham said he believes regulators in Southern states are trying to block the grid upgrades in the Midwest because their utilities want to earn higher profits by building their own plants instead of sharing electricity.

The three Southern state commissions did not respond to a request for comment.

Republicans hold a majority on the FERC panel after the U.S. Senate earlier this month confirmed two new U.S. President Donald Trump-appointed commissioners to fill vacant roles on the five-member panel.

However, not all Republicans oppose the $22 billion transmission package.

Officials representing the red states of Indiana, Iowa and Kentucky defended the MISO plan, along with utilities and the governor in Michigan. So did the Data Center Coalition, the top trade group for builders of the huge computing infrastructure.

“In Iowa alone, more than 7 (gigawatts) of proposed energy generation projects would be stalled by months to even years if the Commission decides to delay its implementation,” wrote Iowa’s Republican Gov. Kim Reynolds, in a letter to FERC.

In letters to FERC, Xcel, MISO and others appealed to Trump’s support for construction of data centers to support artificial intelligence, his stated goal of “energy dominance” and economic competition with China.

While Trump’s administration has cut funding to states with Democratic governors for power lines — including a $464 million grant to Minnesota — the feds last week also approved a large loan for power lines across Indiana, Michigan, Ohio, Oklahoma and West Virginia.

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