By Shaina Cole | Contributing Writer, Rocky Mountain Voice
One of the biggest open questions about who pays for Colorado’s data center boom is being decided this fall at the Public Utilities Commission, and the answer testimony that frames the fight is already filed. By Aug. 19, intervenors had filed a stack of answer testimony in Proceeding No. 26AL-0137E,
Xcel Energy’s proposed Large Load Tariff. The case has drawn a crowd. Google is in it. So is Walmart. So is the City and County of Denver, the City of Boulder, the electric cooperative United Power, the state’s own energy office, and the commission’s trial staff.
The evidentiary hearing is set for 5 days across late October, Oct. 21, 22, 26, 27 and 28. A second public comment hearing is set for Oct. 20. The hearing wraps 6 days before Colorado’s Nov. 3 general election, and the commission has not set a date to decide the question of whether ordinary Xcel customers help pay for data center power.
What Xcel asked for
Xcel filed the tariff on April 2 as Advice Letter No. 2018-Electric. The company’s own summary says the plan is built so that large-load customers “are responsible for at least the incremental costs associated with serving their load and that such costs are not unreasonably borne by non-large load customers.” Current customers, the filing says, “will not be adversely affected by this filing.”
The mechanism is a new customer class, Schedule TL, for retail transmission-level customers arriving with 50 megawatts or more of new or expanded load. Those customers would cover the cost of the transmission lines, substations, interconnection upgrades, and new generation needed to serve them.
Xcel wants them locked into contracts of 15 years or more, an 80% take-or-pay minimum billing demand, credit collateral, and early-exit fees to guard against stranded costs if a data center closes or shrinks.
The filing also adds an optional Clean Transition Tariff for customers that want to fund advanced clean-energy resources, and a Speed-to-Market pathway that Xcel says allows tailored contract arrangements while keeping its cost-allocation and customer-protection rules.
The full case rests on the direct testimony of five Xcel witnesses, among them Jeffrey Knighten, the company’s director of regulatory pricing and analysis, whose cost modeling several intervenors spend their filings attacking.
That is the proposal. The answer testimony is where it gets tested, and not from the direction the political framing would predict.
The subsidy runs both ways
The loudest fear in the national data center debate is that households end up covering the grid build-out for hyperscalers. In this docket, the hyperscaler is arguing the opposite.
Google’s witness, Dr. Carolyn Berry, told the commission that Xcel’s “higher-of” cost-allocation method, the rule that charges large loads the higher of average system cost or their own incremental cost, is “biased, internally inconsistent, and not reflective of the cost to serve.” She testified it produces what she called a “substantial reverse subsidy.”
Using Xcel’s own modeling, she said large-load customers would overpay relative to what it costs to serve them by $517 million over 6 years in one growth scenario, with the excess flowing to lower rates for everyone else. The overcollection, she testified, averages more than $150 million a year across 2028, 2029 and 2030.
Walmart came at the same tariff from the other side.
Its witness, Dr. Jaime McGovern, framed the company’s goal as shielding “general ratepayers from speculative grid expansions,” and told the commission to approve the incremental cost test that Google wants rejected.
Walmart backed a “growth-for-growth” approach that directly assigns the cost of new generation to the large loads that cause it, and asked that any surplus the large-load class throws off, which it put at more than $500 million in generation revenue during early ramp years, be tracked and credited back to lower other customers’ base rates.
The Conservation Coalition, made up of the Natural Resources Defense Council and the Sierra Club, reached yet another conclusion. Its witness, Justin Brant, testified that the tariff “do[es] not go far enough to protect other customers,” that the cost test “will shift costs to other customer classes,” and that Xcel’s recovery plan would hand the company “windfall profits.”
The same method, read three ways by three parties. That is the fight the commission has to resolve.
How long a leash, how much collateral
Google wants Xcel’s exit and capacity-reduction fees shortened, capped at the shorter of 5 years of minimum demand charges or the actual years left on a contract.
Walmart went the other way, supporting the 15-year term and asking to strengthen the exit protections, lengthening the termination notice from 24 months to 36 to 42 months and stiffening the exit fee.
The Conservation Coalition wants the term to start only after a customer ramps to full load, and proposes a tiered minimum, ramp period excluded, running 15 years for customers between 30 and 50 megawatts, an extra year for every 5 megawatts above that, and 25 years for loads above 100 megawatts.
The Colorado Energy Office pulls the other direction on some protections, asking for a one-time penalty-free capacity reduction of up to 20% during a customer’s load ramp and a separate flexible-service schedule where the standard term and exit rules would not apply.
The commission’s own trial staff goes further than Xcel on duration.
Staff witness Dr. Dipesh Dipu recommended a minimum term of 20 years after a project reaches commercial operation. He also recommended lines of credit worth at least 60 months of minimum monthly bills, and a bank guaranty equal to 150% of the remaining rate base, revolving annually until the contract ends.
Xcel’s proposed 15-year term, by contrast, can include a ramp period of up to 5 years, which the Coalition notes leaves as little as 10 years at fully contracted load.
On contract duration, Xcel’s 15-year proposal sits closer to the floor than the ceiling among the parties in the record. Walmart supports it, Staff recommends 20 years, and the Conservation Coalition reaches for 25 years on the largest loads.
What survives settlement is anyone’s guess.
The threshold everyone can see, and the ways around it
The Conservation Coalition pushed to lower the threshold, asking the commission to apply Schedule TL to all new or expanded load above 30 megawatts, with a 60% load-factor screen for customers between 30 and 50 megawatts if the commission wants to spare electrification loads.
Walmart pushed the other way, asking for a 75-megawatt floor so the dedicated class captures only “exceptionally large, system-impacting speculative loads” and leaves smaller commercial and industrial customers alone.
Under Xcel’s own proposal, customers using between 20 and 50 megawatts may already be pulled in. Another part of the fight is whether a customer can structure its load to stay below the line.
Denver’s witness, Cedar Blazek, devoted a section of testimony to what the city called “gaming” the threshold, warning that customers could “subdivide operations, segment metering configurations, or distribute load across adjacent parcels” to stay under 50 megawatts and get billed as ordinary customers.
Denver asked the commission to let Xcel aggregate load across commonly owned or functionally integrated sites, run compliance reviews, and automatically reassign customers to Schedule TL when restructuring is found to be strategic rather than operational.
The Colorado Energy Office proposed a different screen, a minimum load factor of 75 to 85% built into the definition of a large-load customer.
A co-op says it is already stuck
United Power, a member-owned electric cooperative, used its filing to air a live grievance.
Its witness, Jonathan Aust, testified that the co-op has a pending 600-megawatt large-load interconnection request with Xcel and has run into “delay and a lack of transparency.” United Power asked the commission to sort out how its interconnection process and Xcel’s proposed one will coexist, processing its pending request before Xcel begins entering new Schedule TL interconnection agreements.
The tariff question is not abstract for data center developers.
In an August interview with RMV about his Project Taurus data center, which goes before the Colorado Springs City Council on Sept. 17, Raeden co-founder Jason Green praised the setup at Colorado Springs Utilities, a municipal nonprofit outside Xcel territory, for walling a data center’s power costs off from everyone else’s bills, an approach he said he would like to see applied to other data center projects.
Proceeding No. 26AL-0137E is the test of whether Xcel’s residential customers get that same protection, and on what terms.
What is left before the ruling
Rebuttal and cross-answer testimony is due Sept. 23. Any settlement is due Oct. 5. Then comes the Oct. 20 public comment hearing and the 5-day evidentiary hearing that follows, and a decision on no fixed calendar.
Across Xcel territory, state regulators have modeled average residential electricity rates rising as much as 55% by 2029 against 2024 levels as the utility faces billions in new generation and transmission spending, with data centers adding to the demand growth.
This tariff is meant to decide how the costs of serving those large loads get split between the new customers and everyone else on Xcel’s system. Google, Walmart and the rest of the intervenors have already filed.
The public comment window is still open.