Xcel’s large load tariff fight: Who will pay for Colorado’s data centers?
Colorado's Public Utilities Commission is deliberating Xcel Energy's proposed Large Load Tariff, which aims to make large power consumers, including data centers, responsible for their own electricity infrastructure costs. Intervenors like Google argue the tariff overcharges them, while Walmart and environmental groups contend it doesn't sufficiently protect ordinary ratepayers. Evidentiary hearings are scheduled for late October to decide the complex cost allocation issues.
The Public Utilities Commission in Colorado is currently reviewing Xcel Energy's proposed Large Load Tariff, identified as Proceeding No. 26AL-0137E. This tariff, filed as Advice Letter No. 2018-Electric, is designed to ensure that large-load customers, specifically those with 50 megawatts or more of new or expanded load, cover the incremental costs of the transmission lines, substations, interconnection upgrades, and new generation required to serve them. The proposal includes 15-year contracts, an 80% take-or-pay minimum billing demand, credit collateral, and early-exit fees to prevent stranded costs.
Key intervenors, including Google, Walmart, the City and County of Denver, the City of Boulder, United Power, the Colorado Energy Office, and the Conservation Coalition (Natural Resources Defense Council and Sierra Club), have filed answer testimonies, presenting varied perspectives. Google argues that Xcel's proposed cost-allocation method is biased and would lead to a "substantial reverse subsidy," causing large-load customers to overpay by over $500 million over six years. Conversely, Walmart advocates for the incremental cost test, seeking to shield general ratepayers from speculative grid expansions and suggesting that any surplus generation revenue from large loads be credited back to reduce other customers' base rates. The Conservation Coalition contends the tariff does not go far enough to protect other customers and could lead to "windfall profits" for Xcel.
The debate also encompasses contract duration, with Xcel proposing 15 years, staff recommending 20, and the Conservation Coalition suggesting up to 25 years for the largest loads. Additionally, intervenors are debating the load threshold for the tariff, with proposals ranging from 30 MW to 75 MW, and concerns raised by Denver about customers potentially subdividing operations to avoid the higher-cost class. Evidentiary hearings are scheduled for five days in late October, alongside a public comment hearing, with a decision date yet to be set.