The rhetoric is always so sweet and the "deals" are always sold as being for the greater benefit of the state local economies and blah blah blah.
We've seen it a hundred times before.
So color me a deep dark shade of suspicious. The giant corporations have been peddling this bullshit for at least a coupla generations now, and what we're left with is a rapidly shrinking middle class and ruling elites who keep externalizing their costs with the help of coin-operated politicians and captive regulators.
You want to do something big? OK, but you get to pay for it. You own the risk, and you eat the cost. That's how we do things here.
You want to do something big? OK, but you get to pay for it. You own the risk, and you eat the cost. That's how we do things here.
Wanna do something amazing? Fine, but you show me exactly what you're committing to in terms of financing, and protecting me and my neighbors from the inevitable shit that always rolls down the hill into our yards.
Wanna get good and drunk? Great, but you don't put your drinks on my tab, and you pay for your own goddamned Uber to get your sorry ass home.
I'm sick to fucking death of helping rich people fatten up their bank accounts.
More data centers are coming to Colorado, demanding more power than they’ll need. Will customers foot the bill?
Colorado regulators want rules in place to shield ordinary household and business customers from getting stuck paying for increased generating and transmission capacity
The data centers are coming. The question is how many will there be and who will pay for the power and transmission they need?
In Colorado and across the country utilities are beginning to take steps — mainly through special tariffs for large-load customers — to try to answer both questions and in doing so protect consumers.
The Colorado Public Utilities Commission is requiring Xcel Energy, the state’s largest electricity provider, to use a set of “principles” when negotiating with data center developers, including upfront fees, 15-year contracts, minimum bills, security deposits and early-exit fees.
The Tri-State Generation and Transmission Association, the wholesale power provider for electric cooperatives in four states including 15 in Colorado, is also developing a “large-load tariff” with similar protections.
The PUC also directed Xcel Energy to file a proposal for a large-load tariff in January that will be more binding than the principles, which are negotiating points.
What is happening in Colorado is part of a trend as at least 36 utilities — from Dominion Energy in Virginia to Wisconsin Electric Power to Arizona Public Service — have adopted large-load tariffs.
And while these tariffs are a start, consumer advocates and industry analysts caution that they may not completely protect residential and small commercial customers from data center-related costs.
“They do get rid of stranded costs and help with ratepayer burden,” said Sarp Ozkan, a vice president at the energy analytics firm Enverus. “They also do get rid of a lot more of the speculative projects, which we know has been a big driver of the expected volumes.”
“So, I think, these tariffs are heading in the right direction,” Ozkan said.
One basic problem is that data center projects are filing for more power than they will ultimately need and filing the same project with multiple utilities — “site shopping” — to find where they can connect to the grid most quickly.
About 90 gigawatts of peak data center demand requests are expected to be filed nationally between now and 2030, but only 65 GW will be needed, according to power sector consultant Gridwise Strategies.
The risk is if a utility builds or contracts for power and the data center doesn’t get built, the rest of the customers will end up footing the bill.
This is apparently what happened when Columbus, Ohio-based American Electric Power subsidiaries — in Indiana, West Virginia and Kentucky — acquired 750 megawatts of generating capacity for data centers that didn’t materialize, creating stranded costs.
Georgia is one of the hotbeds of data center development with 147 in the Atlanta area — 26 under construction and 52 more planned — according to the Data Center Map and data center consultant Baxtel.
Georgia Power in September told state regulators that in the previous 90 days 6 gigawatts of large-load projects were cancelled. A GW is enough electricity to power up to 750,000 average households.
Xcel Energy’s subsidiary — Public Service Company of Colorado — is projecting large-load customers will make up two-thirds of its new electricity demand and said it will need 950 MW of new generation to serve these customers over the next five years.
Between October 2024 and last May, however, seven potential Xcel Energy data customers projecting 4 GW of load withdrew service requests and more than a dozen new prospects with 3.5 GW of load filed service requests, according to a filing with the PUC.
Since then, one of Xcel Energy’s largest potential large-load customers withdrew its request for service, the PUC said.
“Public Service is in the best position to know the likelihood of the large loads actually connecting to its system,” the PUC said. “Yet in its more recent positions … the company stated it is unwilling to share the financial risk of the large loads ultimately not materializing.”
Data centers want proof of power. PUC wants proof they’ll show up to use it.
Colorado has 60 data centers with 49 in the Denver area and seven in Colorado Springs, according to the Data Center Map. While Georgia is the site for large-scale or hyperscale-data centers, each demanding from 120 MW to 1,800 MW of power, Colorado as a secondary market is home to smaller facilities.
One hyperscale data center is being built by QTS Realty Trust in Aurora. When completed, its 177-megawatt capacity will make it Xcel Energy’s single largest customer. For the most part Colorado has smaller colocation data centers which use 18 MW to 40 MW.
Colocation data centers — where companies lease computing power — are being built or expanded in the state by several companies — including CoreSites, Flexential and Novva Data Center.
In its 2024 electric resource plan Xcel Energy initially proposed adding 12,000 to 14,000 MW of new generation, projecting 19% increase in peak demand to 8.6 GW by 2031. The company said it will need to spend $22 billion by 2040 to keep up with demand
“We asked for what we thought we needed,” said Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary.
The company in its PUC filings argued it faces a “chicken and egg” dilemma because data center developers won’t sign unless they are sure they can get necessary power, but the PUC wants them to sign before Xcel Energy seeks that generating capacity.
“Allowing the Company to procure a surplus of new generation to attract prospective large customers places an unacceptable amount of risk on the existing customers,” the commission said.
Concerned over the impact on rates and the risk of over-building, à la American Electric Power, the PUC set the new generation in the Xcel Energy electric resource plan approved November at 6,000 MW, with a second pool of projects if needed.
“Existing customers should not be required to bear higher electricity rates if large loads withdraw their interconnection requests, nor should existing customers be required to subsidize the cost of serving new large loads,” the PUC said in approving the plan.
Data centers should have “skin in the game”
The commission said it wanted data center developers to have “skin in the game” before Xcel Energy committed to new generation and transmission lines.
To that end, the commission included in the resource plan a protective set of “principles,” initially proposed by the company, in an effort to protect consumers.
The principles, the PUC said, would apply to any customer needing 50 MW or more of power. (Xcel Energy wanted the threshold set at 100 MW.) Each would need to provide a $250,000 non-refundable study deposit and a cash security deposit or letter of credit.
The data center would have to commit to a 15-year contract and early-exit fee equal to 75% of all the electricity the facility would have used over the life of the contract.
Xcel Energy could not include the new data center in its load forecast until the center signed agreements for electric service and for a connection to the grid.
Since these are only principles, it is left to Xcel Energy to negotiate terms with data center developers, but the commission warned that if the utility “negotiates away these approved commercial principles and a large customer does not materialize as expected, Public Service may share the risk associated with the shortfall in expected revenues.”
The agreements Xcel Energy and a data center developer strike could be supplanted when a new large-load tariff is approved sometime in 2026.
“We just need some clarity,” Jack Ihle, Xcel’s regional vice president for regulatory policy. “We have customers who want to connect to the grid.”
New data centers, however, don’t have to be all risk and no upside.
“Having new data centers in the greater Denver area is a benefit to the local and state economy,” Andrew Klein, CEO of the Westside Property Investment Company, said in PUC testimony on behalf of the East Metro Area Business Coalition.
“Additional tax revenues flowing to the state will benefit the state as a whole and make Colorado more attractive to other business sectors reliant on tech services,” Klein said.
Will Toor, the executive director of the Colorado Energy Office, said the aim is to promote economic development while ensuring that costs aren’t being shifted to other customers.
“Another factor to keep in mind on this is the potential role that load growth can play in actually helping with rates for all customers,” Toor said.
“As we look out at the future of the grid, there are investments that are going to be needed in things like wildfire resiliency, that are likely needed to some extent, regardless of the level of load,” he said.
The bigger the load the more those costs will be spread out among the customers even potentially lowering residential bills “if the rates are property set,” Toor said.
I'm sick to fucking death of helping rich people fatten up their bank accounts.
More data centers are coming to Colorado, demanding more power than they’ll need. Will customers foot the bill?
Colorado regulators want rules in place to shield ordinary household and business customers from getting stuck paying for increased generating and transmission capacity
The data centers are coming. The question is how many will there be and who will pay for the power and transmission they need?
In Colorado and across the country utilities are beginning to take steps — mainly through special tariffs for large-load customers — to try to answer both questions and in doing so protect consumers.
The Colorado Public Utilities Commission is requiring Xcel Energy, the state’s largest electricity provider, to use a set of “principles” when negotiating with data center developers, including upfront fees, 15-year contracts, minimum bills, security deposits and early-exit fees.
The Tri-State Generation and Transmission Association, the wholesale power provider for electric cooperatives in four states including 15 in Colorado, is also developing a “large-load tariff” with similar protections.
The PUC also directed Xcel Energy to file a proposal for a large-load tariff in January that will be more binding than the principles, which are negotiating points.
What is happening in Colorado is part of a trend as at least 36 utilities — from Dominion Energy in Virginia to Wisconsin Electric Power to Arizona Public Service — have adopted large-load tariffs.
And while these tariffs are a start, consumer advocates and industry analysts caution that they may not completely protect residential and small commercial customers from data center-related costs.
“They do get rid of stranded costs and help with ratepayer burden,” said Sarp Ozkan, a vice president at the energy analytics firm Enverus. “They also do get rid of a lot more of the speculative projects, which we know has been a big driver of the expected volumes.”
“So, I think, these tariffs are heading in the right direction,” Ozkan said.
One basic problem is that data center projects are filing for more power than they will ultimately need and filing the same project with multiple utilities — “site shopping” — to find where they can connect to the grid most quickly.
About 90 gigawatts of peak data center demand requests are expected to be filed nationally between now and 2030, but only 65 GW will be needed, according to power sector consultant Gridwise Strategies.
The risk is if a utility builds or contracts for power and the data center doesn’t get built, the rest of the customers will end up footing the bill.
This is apparently what happened when Columbus, Ohio-based American Electric Power subsidiaries — in Indiana, West Virginia and Kentucky — acquired 750 megawatts of generating capacity for data centers that didn’t materialize, creating stranded costs.
Georgia is one of the hotbeds of data center development with 147 in the Atlanta area — 26 under construction and 52 more planned — according to the Data Center Map and data center consultant Baxtel.
Georgia Power in September told state regulators that in the previous 90 days 6 gigawatts of large-load projects were cancelled. A GW is enough electricity to power up to 750,000 average households.
Xcel Energy’s subsidiary — Public Service Company of Colorado — is projecting large-load customers will make up two-thirds of its new electricity demand and said it will need 950 MW of new generation to serve these customers over the next five years.
Between October 2024 and last May, however, seven potential Xcel Energy data customers projecting 4 GW of load withdrew service requests and more than a dozen new prospects with 3.5 GW of load filed service requests, according to a filing with the PUC.
Since then, one of Xcel Energy’s largest potential large-load customers withdrew its request for service, the PUC said.
“Public Service is in the best position to know the likelihood of the large loads actually connecting to its system,” the PUC said. “Yet in its more recent positions … the company stated it is unwilling to share the financial risk of the large loads ultimately not materializing.”
Data centers want proof of power. PUC wants proof they’ll show up to use it.
Colorado has 60 data centers with 49 in the Denver area and seven in Colorado Springs, according to the Data Center Map. While Georgia is the site for large-scale or hyperscale-data centers, each demanding from 120 MW to 1,800 MW of power, Colorado as a secondary market is home to smaller facilities.
One hyperscale data center is being built by QTS Realty Trust in Aurora. When completed, its 177-megawatt capacity will make it Xcel Energy’s single largest customer. For the most part Colorado has smaller colocation data centers which use 18 MW to 40 MW.
Colocation data centers — where companies lease computing power — are being built or expanded in the state by several companies — including CoreSites, Flexential and Novva Data Center.
In its 2024 electric resource plan Xcel Energy initially proposed adding 12,000 to 14,000 MW of new generation, projecting 19% increase in peak demand to 8.6 GW by 2031. The company said it will need to spend $22 billion by 2040 to keep up with demand
“We asked for what we thought we needed,” said Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary.
The company in its PUC filings argued it faces a “chicken and egg” dilemma because data center developers won’t sign unless they are sure they can get necessary power, but the PUC wants them to sign before Xcel Energy seeks that generating capacity.
“Allowing the Company to procure a surplus of new generation to attract prospective large customers places an unacceptable amount of risk on the existing customers,” the commission said.
Concerned over the impact on rates and the risk of over-building, à la American Electric Power, the PUC set the new generation in the Xcel Energy electric resource plan approved November at 6,000 MW, with a second pool of projects if needed.
“Existing customers should not be required to bear higher electricity rates if large loads withdraw their interconnection requests, nor should existing customers be required to subsidize the cost of serving new large loads,” the PUC said in approving the plan.
Data centers should have “skin in the game”
The commission said it wanted data center developers to have “skin in the game” before Xcel Energy committed to new generation and transmission lines.
To that end, the commission included in the resource plan a protective set of “principles,” initially proposed by the company, in an effort to protect consumers.
The principles, the PUC said, would apply to any customer needing 50 MW or more of power. (Xcel Energy wanted the threshold set at 100 MW.) Each would need to provide a $250,000 non-refundable study deposit and a cash security deposit or letter of credit.
The data center would have to commit to a 15-year contract and early-exit fee equal to 75% of all the electricity the facility would have used over the life of the contract.
Xcel Energy could not include the new data center in its load forecast until the center signed agreements for electric service and for a connection to the grid.
Since these are only principles, it is left to Xcel Energy to negotiate terms with data center developers, but the commission warned that if the utility “negotiates away these approved commercial principles and a large customer does not materialize as expected, Public Service may share the risk associated with the shortfall in expected revenues.”
The agreements Xcel Energy and a data center developer strike could be supplanted when a new large-load tariff is approved sometime in 2026.
“We just need some clarity,” Jack Ihle, Xcel’s regional vice president for regulatory policy. “We have customers who want to connect to the grid.”
New data centers, however, don’t have to be all risk and no upside.
“Having new data centers in the greater Denver area is a benefit to the local and state economy,” Andrew Klein, CEO of the Westside Property Investment Company, said in PUC testimony on behalf of the East Metro Area Business Coalition.
“Additional tax revenues flowing to the state will benefit the state as a whole and make Colorado more attractive to other business sectors reliant on tech services,” Klein said.
Will Toor, the executive director of the Colorado Energy Office, said the aim is to promote economic development while ensuring that costs aren’t being shifted to other customers.
“Another factor to keep in mind on this is the potential role that load growth can play in actually helping with rates for all customers,” Toor said.
“As we look out at the future of the grid, there are investments that are going to be needed in things like wildfire resiliency, that are likely needed to some extent, regardless of the level of load,” he said.
The bigger the load the more those costs will be spread out among the customers even potentially lowering residential bills “if the rates are property set,” Toor said.
"No, really - we're acting in your best interests - like all mega-corporations and the ultra-wealthy. C'mon, you can trust us."
Separating the real proposals from the speculative ones
Tri-State — which serves 41 rural electric cooperatives in Nebraska, Wyoming, Colorado and New Mexico — has at least 10 proposals for large data centers across its service area, with an estimated 7 GW of demand.
“They keep coming,” said Lisa Tiffin, Tri-State’s chief commercial officer. “I am not sure of the exact number now, but a few more have flown our way.”
Tri-State is regulated by the Federal Energy Regulation Commission and in August the association submitted a proposed binding tariff for data centers and other large-load customers to FERC.
“Tri-State’s existing resource and member planning processes are insufficient to handle the magnitude of applications,” the association told the commission.
Tri-State’s proposed tariff would apply to loads of 45 MW or more and require an evaluation fee based on the size of the project. For a 45-MW project the fee would be $80,000, for a 100-MW project it would be $150,000 and for 200-MW $250,000.
The data center would have to commit to minimum energy and minimum demand charges, a security deposit of $2.7 million for each project MW and a 15-year contract.
Tri-State is a wholesaler providing power to its member co-ops and its initial proposal included requirements between cooperatives and developers, which are considered retail sales. As a result the FERC rejected the tariff.
Tri-State is “going to lift out” the co-op requirements and address some other issues the FERC identified and resubmit the tariff in February. “We actually took the ruling as a good sign,” Tiffin said.
The mechanisms Xcel Energy and Tri-State are using to manage the cost and impacts of data centers — long-term contracts, upfront fees, security deposits and exit fees — are similar to those employed across the country, said Enverus’ Ozkan, who has evaluated 94 large-load tariffs.
They create a bar that separates real projects from speculative ones, he said. American Electric Power’s Ohio subsidiary has a tariff that Enverus estimates can add nearly $10 million in first-year costs for a 100 MW facility.
“It’s clearing the queue” of projects, Ozkan said. “So, we’ve seen that it is effective in weeding out some of the speculative positions.”
Consumers aren’t shielded from all the extra costs
These tariffs, however, still leave consumers potentially liable for some costs, analysts and consumer advocates say.
The 75% minimum bill in Xcel Energy’s principles, for example, could leave other customers on the hook for the remaining 25%, said Joseph Pereira, deputy director of the Colorado Office of the Utility Consumer Advocate.
“It’s impossible to fully segregate out all the costs,” Pereira said. “There is always some risk.”
A bigger risk may come from a fundamental “mismatch between the two industries,” Ozkan said. “It kind of covers the gamut.”
Data center developers are looking to get facilities up and running in 18 to 24 months, but it can take three to five years to build new generating capacity and transmission. The queues to get connected to the grid in some places are already three to five years long.
“So, there’s already a mismatch there between the generation and the load size, expectations of timing,” Ozkan said.
Data center developers are facing the need to undertake multiple cycles of intense and increasingly expensive capital expenditure within a single lease term, posing considerable tenant churn risks, according to a report from the Center for Public Enterprise.
They also face the risk of new generations of technology replacing the existing one, cash flows that are uncertain and debt playing a bigger role in financing, the Center report said.
All this leads to moving with dispatch while the utility sector plods along. Xcel Energy got the green light to add 6,000 MW of new capacity in November, while it is still fulfilling the capacity from its 2021 plan.
The PJM Interconnect is the nation’s largest grid — serving Mid-Atlantic and Midwestern states — and in November its independent market monitor, Monitor Analytics, filed a complaint with FERC seeking to bar the grid from adding any more data centers until it builds more generating capacity.
And even if the new large-load tariffs are implemented, they do not cover all the costs of new infrastructure, according to Ben Hertz-Shargel, head of grid analysis at the consulting firm Wood Mackenzie.
“When you look at what it costs to develop a gas plant, and you compare it to what these utilities are charging customers or proposing to charge, there’s a gap,” Hertz-Shargel said in a podcast.
In addition, new power plants and transmission are generally paid off over 20 to 25 years, while the data center contracts range from 10 to 15 years, potentially leaving other customers paying off the tail end of the amortization. An early exit from a contract would make it worse.
“The company leaves for whatever reason, and then all of a sudden, silently, deep, deep in a proceeding, you will see a line item of ‘allocated across customer classes,’” Hertz-Shargel said. “So, they may feel it later, but it won’t be this big clear, bright light saying, ‘You have been charged because you failed to foresee this.’”
These are the kind of issues that must be hashed out before the PUC next year in the large-load tariff proceedings to replace Xcel Energy’s principles, said Clare Valentine, a senior policy advisor at the environmental policy group Western Resource Advocates.
“This commission decision really represents the first step in setting these guardrails to protect Coloradans,” Valentine said, “but this is just the beginning of what we need to do to change policies to respond to this large load growth environment.”
Tri-State — which serves 41 rural electric cooperatives in Nebraska, Wyoming, Colorado and New Mexico — has at least 10 proposals for large data centers across its service area, with an estimated 7 GW of demand.
“They keep coming,” said Lisa Tiffin, Tri-State’s chief commercial officer. “I am not sure of the exact number now, but a few more have flown our way.”
Tri-State is regulated by the Federal Energy Regulation Commission and in August the association submitted a proposed binding tariff for data centers and other large-load customers to FERC.
“Tri-State’s existing resource and member planning processes are insufficient to handle the magnitude of applications,” the association told the commission.
Tri-State’s proposed tariff would apply to loads of 45 MW or more and require an evaluation fee based on the size of the project. For a 45-MW project the fee would be $80,000, for a 100-MW project it would be $150,000 and for 200-MW $250,000.
The data center would have to commit to minimum energy and minimum demand charges, a security deposit of $2.7 million for each project MW and a 15-year contract.
Tri-State is a wholesaler providing power to its member co-ops and its initial proposal included requirements between cooperatives and developers, which are considered retail sales. As a result the FERC rejected the tariff.
Tri-State is “going to lift out” the co-op requirements and address some other issues the FERC identified and resubmit the tariff in February. “We actually took the ruling as a good sign,” Tiffin said.
The mechanisms Xcel Energy and Tri-State are using to manage the cost and impacts of data centers — long-term contracts, upfront fees, security deposits and exit fees — are similar to those employed across the country, said Enverus’ Ozkan, who has evaluated 94 large-load tariffs.
They create a bar that separates real projects from speculative ones, he said. American Electric Power’s Ohio subsidiary has a tariff that Enverus estimates can add nearly $10 million in first-year costs for a 100 MW facility.
“It’s clearing the queue” of projects, Ozkan said. “So, we’ve seen that it is effective in weeding out some of the speculative positions.”
Consumers aren’t shielded from all the extra costs
These tariffs, however, still leave consumers potentially liable for some costs, analysts and consumer advocates say.
The 75% minimum bill in Xcel Energy’s principles, for example, could leave other customers on the hook for the remaining 25%, said Joseph Pereira, deputy director of the Colorado Office of the Utility Consumer Advocate.
“It’s impossible to fully segregate out all the costs,” Pereira said. “There is always some risk.”
A bigger risk may come from a fundamental “mismatch between the two industries,” Ozkan said. “It kind of covers the gamut.”
Data center developers are looking to get facilities up and running in 18 to 24 months, but it can take three to five years to build new generating capacity and transmission. The queues to get connected to the grid in some places are already three to five years long.
“So, there’s already a mismatch there between the generation and the load size, expectations of timing,” Ozkan said.
Data center developers are facing the need to undertake multiple cycles of intense and increasingly expensive capital expenditure within a single lease term, posing considerable tenant churn risks, according to a report from the Center for Public Enterprise.
They also face the risk of new generations of technology replacing the existing one, cash flows that are uncertain and debt playing a bigger role in financing, the Center report said.
All this leads to moving with dispatch while the utility sector plods along. Xcel Energy got the green light to add 6,000 MW of new capacity in November, while it is still fulfilling the capacity from its 2021 plan.
The PJM Interconnect is the nation’s largest grid — serving Mid-Atlantic and Midwestern states — and in November its independent market monitor, Monitor Analytics, filed a complaint with FERC seeking to bar the grid from adding any more data centers until it builds more generating capacity.
And even if the new large-load tariffs are implemented, they do not cover all the costs of new infrastructure, according to Ben Hertz-Shargel, head of grid analysis at the consulting firm Wood Mackenzie.
“When you look at what it costs to develop a gas plant, and you compare it to what these utilities are charging customers or proposing to charge, there’s a gap,” Hertz-Shargel said in a podcast.
In addition, new power plants and transmission are generally paid off over 20 to 25 years, while the data center contracts range from 10 to 15 years, potentially leaving other customers paying off the tail end of the amortization. An early exit from a contract would make it worse.
“The company leaves for whatever reason, and then all of a sudden, silently, deep, deep in a proceeding, you will see a line item of ‘allocated across customer classes,’” Hertz-Shargel said. “So, they may feel it later, but it won’t be this big clear, bright light saying, ‘You have been charged because you failed to foresee this.’”
These are the kind of issues that must be hashed out before the PUC next year in the large-load tariff proceedings to replace Xcel Energy’s principles, said Clare Valentine, a senior policy advisor at the environmental policy group Western Resource Advocates.
“This commission decision really represents the first step in setting these guardrails to protect Coloradans,” Valentine said, “but this is just the beginning of what we need to do to change policies to respond to this large load growth environment.”
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