Will Coloradans foot the bill for data centers? Regulators aim to prevent that.

The Colorado Public Utilities Commission (PUC) is preparing to review proposed electricity rates for "large-load" customers, a category that will encompass data centers, with the primary goal of preventing residential and small-business customers from subsidizing the high energy demands of these facilities. Xcel Energy, Colorado's largest electric utility, is anticipated to submit its rate proposal by April 2. The growing demand for artificial intelligence is fueling data center expansion nationwide, raising concerns about their significant water and electricity consumption. PUC Director Rebecca White emphasized that protecting ratepayers is a bottom line. Michelle Aguayo, an Xcel spokeswoman, stated the company aims to protect customers while serving large-load users, recognizing the jobs and investment data centers bring. This issue influenced the PUC's decision last year to significantly reduce the new power sources Xcel originally requested, noting that potential data centers accounted for 62% of Xcel's projected energy growth. Colorado lawmakers are considering bills related to data centers, including tax incentives for developers and new regulatory requirements. Rep. Ken DeGraaf has sponsored House Bill 26-1246, which would allow large-load customers to provide their own unregulated power sources. The PUC has also established initial guidelines for data centers, such as requiring service and interconnection agreements before load forecasting, minimum-term contracts, and exit fees. Erin O'Neill, PUC deputy director of fixed utilities, cited concerns about large users driving up utility bills in other states, a scenario the commission aims to avoid. Western Resource Advocates, a party in past proceedings, expressed concern about data centers' impact on ratepayers and views the upcoming rate filing as a critical step for customer protection. While acknowledging the potential for data centers to spread costs and integrate renewable energy, White stressed that these benefits require proper planning, oversight, and safeguards for existing customers.