Click the link to read the article on the Big Pivots website (Allen Best):
April 2, 2026
Utility depicts proposed large-load tariff as a way of teaming with developers to bring on innovation
Xcel Energy today filed a proposal with the Colorado Public Utilities Commission to create a large-load tariff applicable to developers of data centers that expect to need 50 megawatts of electricity or more.
Xcel’s Jack Ihle, the company’s vice president for data centers and large loads, said the company believes it can meet its legal obligation to both reduce emissions 80% by 2030 and meet the needs of data center developers.
In the last 18 months, Xcel has expressed growing worries about whether it would have the electricity it needs to meet rising demands. This worry was expressed even before its newest and large coal-burning unit, Comanche 3, went down last August. That unit is now expected to return to service in August. Xcel in March suggested it may want to delay retirement of its two coal-burning units at Hayden until 2030. They are currently scheduled to be retired in 2027 and 2028.
Ihle said the company’s resource adequacy concerns pertain mostly to the near term. Longer term, when the tariff for large-load customers would have effect, the company believes it’s in good shape owing to actions already underway. For example, the PUC authorized a rushed near-term solicitation in September 2025 that allowed the company to take advantage of tax credits for clean energy that will expire because of the One Big Beautiful Bill Act passed by Congress last July.
See: “Elephant-sized plans for eastern Colorado,” Dec.8, 2025, Big Pivots.
Data center developers could be part of the solution, said Ihle. Xcel sees the data centers as potential partners in developing next-generation energy and storage technologies.
“We may able to partner with large-load customer hyperscalers, who have the risk appetite, and to explore some of the (possibilities) we have not been able to” as a company.
Most prominent of these next-generation technologies is enhanced geothermal. Gov. Jared Polis in 2024 said he believed that by 2040 Colorado may get 4 to 8% of its electricity from geothermal. Unlike geothermal for buildings, which rely upon heat found in the ground relatively close to the surface, enhanced geothermal involves heat thousands of feet underground.
One company has been exploring whether deep oil wells near Pierce, north of Greeley, could be adapted. Another company has plans near Durango.
More definitive is work underway by Fervo Energy in central-Utah. There, near Milford, it is developing a 400- to 500-megawatt enhanced geothermal system. Two weeks ago, Fervo announced $421 million in financing for the project.
Does Colorado have the same quality geothermal resources lying underfoot? Probably not. The larger question may be whether the technology can develop rapidly enough to be of value in Colorado in the next 15 years.
Ihle also cited the 100-hour storage pilot project using iron-air technology planned at Pueblo. It is, he said, the sort of innovative technology that could be pursued with data centers as partners.
In some places, data centers have started creating their own electrical generation. The concept is called behind the meter, and it’s not necessarily new. Hospitals famously have backup resources.
Ihle said developers of hyperscale data centers — often defined as being 50 megawatts or more — have told him that they would much rather deal with a utility than develop their own resources. In Colorado, for example, building a natural gas plant to provide power for a data center will still require getting permits from the state’s Air Pollution Control Division.
In Minnesota, home base for Xcel, the utility has an agreement with Google that illustrates what it hopes will happen in Colorado.
There, Google plans a data center that will support services that include Workspace, Search, YouTube and Maps. Xcel promises to deliver 1,400 megawatts of wind, 200 megawatts of solar and 300 megawatts of long-duration (100-hour) energy storage. In addition, Google’s agreement with Xcel will yield a $50 million investment toward an Xcel program that is intended to drive reliability on the grid.
Under the agreement, Google will also pay all costs for its new service in line with its typical practices and Minnesota’s regulatory and legislative requirement.
“That is the kind of thing we want in Colorado,” said Ihle.
Xcel stressed that this proposal would not hurt other customers financially. Large-load customers would pay for the power infrastructure needed to serve them. This includes covering electric transmission, substations and interconnection upgrades as well as paying for new electric generation.
The data center developer would need to make a long-term contractual commitment, typically 15 years or more. And what if the customer exits early? Termination charges will recover remaining costs of project-specific upgrades built, avoiding stranded costs for other customers.
In the filing this afternoon, Ihle said this: “Taken together, the Company’s proposal ensures that large load customers bear the costs they impose, protects existing customers from adverse impacts, and creates a structured pathway for responsible growth.
Xcel also stresses the economic potential for data centers in generating tax revenue for schools and other public needs. Xcel says data centers can, depending upon size and location, pay $2 million to $16 million in property taxes.
At a forum in Boulder on Wednesday morning, Lon Huber, senior vice president and chief planning officer for Xcel, described Xcel’s partnership with Google in Minnesota.
“Once you get to like 70 to 80% (emissions-free electricity), it’s really hard to squeeze the last remaining bit out,” said Huber. “So we need new tech. That’s where the partnership comes in.”
Will Toor, director of the Colorado Energy Office, spoke on the same panel.
“There’s a lot of potential benefits that to the extent that we can serve strategically located data centers in places where we don’t need, for instance, significant new transmission investments, where we can make use of curtailed renewables, where we can make use of infrastructure in energy transition communities,” he said.
This depends, he added, upon getting the rate structures right, so that data centers are paying for their incremental costs but are also helping to cover the fixed costs that we have on the system.
If that can be done, he said, it can be good for all ratepayers.