Xcel Energy announced on April 2 that it has submitted a proposal to the Colorado Public Utilities Commission aimed at addressing the growing demand for electricity from large customers, such as data centers. The proposed Large Load Tariff is designed to ensure that existing customers are not required to subsidize the energy needs of these new, high-demand users.
The move comes as communities across Colorado see increased interest from companies with significant electricity requirements. Xcel Energy said its proposal would allow it to serve these customers while protecting residential and small business ratepayers from higher bills. “We understand and share customer concern over the immense energy needs of new, large customers, such as data centers. At the same time we recognize these large customers bring the potential for jobs, investment and innovation to our communities,” said Robert Kenney, president of Xcel Energy—Colorado. “Addressing those concerns by updating rules and policies will help make sure we manage this growth responsibly as we protect customers. This will benefit all customers as we continue to deliver the dependable, safe and low-cost electric service they expect.”
If approved by regulators, the Large Load Tariff would require big electricity users to pay for infrastructure upgrades needed specifically for their operations—including transmission lines, substations, interconnection improvements, and new generation facilities—rather than passing those costs on to other ratepayers. The proposal also sets out terms under which service would be provided: contracts must be signed before service begins; minimum monthly payments are required even if usage ramps up gradually; long-term commitments (typically 15 years or more) must be made; financial security measures are included in case projects are delayed or canceled; and termination charges apply if a customer exits early.
In addition to covering infrastructure costs directly tied to their use, data centers can generate substantial tax revenue for local communities—ranging from $2 million up to $16 million per year depending on facility size—which can support schools, emergency services and public safety initiatives.
The proposed tariff would apply primarily to new or significantly expanded electric loads of 50 megawatts or more but could also affect some customers using between 20 MW and 50 MW. It further offers options for these large entities interested in pursuing carbon-free power sources aligned with state clean energy goals.
Xcel Energy stated it is committed to working with state regulators throughout this process in order “to establish a clear path forward” for serving high-demand sectors while maintaining protections for existing residential and small business consumers.
