State regulators considering Xcel Energy’s plan to meet rising demands for electricity are struggling to ensure there will be enough power for neighborhoods and businesses for years to come while also protecting existing customers from bearing the financial brunt if the growth projections don’t materialize.
Members of the Colorado Public Utilities Commission continued deliberations Thursday on Xcel’s proposal that includes replacing the power from coal plants that are being phased out as well as providing the large volumes of electricity that a boom in data center construction would require. The plan before the PUC was first proposed last year and has been criticized as bloated and a looming fiscal time bomb for ratepayers.
The company has reduced the size of its projected new electricity needs, but PUC members said they are still worried about the potential impacts on the customers who will have to cover the costs if the forecasts are wrong.
“I think the capital spending and the rate impacts associated with it are the single largest challenge in Colorado regulation now. And on this record, we’re seeing conservatively up to 50% impacts on residential customers’ rates in large part driven by the capital spending,” PUC Chairman Eric Blank said.
Minneapolis-based Xcel Energy has said it plans to spend about $22 billion in Colorado in the next five years. Business people who together own nearly 40,000 acres in the east Denver area oppose efforts to significantly scale back the amount of new power that Xcel Energy wants to add to the grid.
“My concern and the concerns of other people in the coalition were about being able to have power so that we can develop our property, so that we can respond to economic growth and economic development demands in the area,” said Chris Fellows, a developer and member of the East Metro Area Business Coalition.
Coalition members worked with a land-use economics firm to project energy needs in the area based on development plans and submitted them to the PUC. Substantially reducing Xcel’s forecasts for new power could be catastrophic for economic growth along the Front Range “and certainly out in that east-metro area,” Fellows said.
Xcel Energy, Colorado’s largest electric utility, is the only source of power in the area, which includes Denver International Airport, Fellows said.
“There’s already a strain on being able to develop. Projects have been delayed” waiting for electricity or natural gas service, Fellows added.
The Metro Mayors Caucus, which represents 38 municipalities, asked the PUC in a letter to approve Xcel’s plan, saying that reliable, sufficient and affordable power “is essential to Colorado’s economic growth, housing development, clean energy transition, and overall quality of life.”
The utility’s proposal is called a just transition plan because it includes ways to assist communities facing the loss of jobs and revenue as retirements of the utility’s coal facilities are accelerated to meet state goals on reductions in greenhouse gas emissions. Pueblo, Moffat, Routt and Rio Blanco counties, home to coal plants and mines, will be hit by the phasing out of coal operations.
Xcel originally proposed adding up to 14 gigawatts of new electricity. The company’s current maximum generating capacity is about 12 gigawatts, according to the PUC. However, not all power sources are available at the same time. The system’s capacity during the peak hours of the day is approximately 7 gigawatts.
There are many variables, but one gigawatt, equal to 1,000 megawatts, is enough to power roughly 340,000 homes.
In recent hearings, PUC members have questioned Xcel’s forecasts for new electricity needs. Some parties intervening in the case noted that Xcel Energy has seen requests from large users, such as data centers, withdrawn while the PUC has been considering the plan.
Xcel, though, expects the demand for electricity to rise by a compounded rate of 4% through 2031, compared with an average annual rate of 0.7% over the past five years. New data centers, large computing facilities in demand due to the use of artificial intelligence, in addition to more electric vehicles and the electrification of buildings are driving the forecasts.
“We’re seeing rapidly escalating costs of our general resources, of needs for transmission,” PUC member Megan Gilman said. “And then we have this really massive load forecast, far in excess of what we’ve seen on the system.”
Gilman said her priority is to support growth on the system, but that it’s important the growth doesn’t occur at the cost or undue risk to existing ratepayers.
Xcel Energy’s updated load forecast in the plan ranges from about 7 gigawatts to nearly 9 gigawatts. Blank said in a previous hearing that he was considering a level some where around 4 gigawatts to 5 gigawatts given a lot of uncertainty.
The PUC will resume deliberation of the first phase of the plan Wednesday. The plan’s second phase, which will be submitted later, will look at the kind and amount of energy resources Xcel proposes.
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