Xcel Energy Unveils New $45 Billion Spending Plan, Of Which $22 Billion for Colorado

Xcel Energy plans to spend $45 billion on capital investments over the next five years, about $22 billion of which will be spent in Colorado as the utility prepares for what it calls a significant shift in energy demand.

Bob Frenzel, chairman, president and CEO of the Minneapolis-based company, announced the investment plan during a conference call Thursday. He told The Denver Post that this is the largest capital spending plan Xcel has ever issued and that it reflects “the critical moment our company’s energy grid is at.”

“This is really driven by a historical shift in energy demand,” Frenzel said. “This is supported by the increased risks of extreme weather events and, of course, the continued acceleration of clean energy adoption across all economic sectors across the country.”

Frenzel said the need for more power on the grid is driven by the continued electrification of homes, businesses and transportation, as well as the growing demand for more electricity to operate. large computing centers as the use of artificial intelligence increases. Xcel expects much of its data center customer growth to come from Colorado.

Part of the $22 billion Xcel plans to invest in Colorado from 2025 to 2029 has been reviewed by the Colorado Public Utilities Commission, including plans to increase the use of renewable energy and up to $2 billion in upgrades to the state’s high-voltage system.

Energy demand in Colorado is expected to double in the next five years from a peak of about 7,200 megawatts to 14,000 megawatts, said Robert Kenney, president of Xcel Energy-Colorado.

Xcel is Colorado’s largest electric utility company. It provides electricity to 1.6 million customers and natural gas to 1.5 million customers, with overlap between both groups.

IN proposal filed Oct. 15 with PUCXcel projects the five-year investment plan will result in rate increases of approximately 2% to 2.5% annually for Colorado customers. “Our goal here is to make the necessary investments and make the accounts as affordable as possible,” Frenzel said.

As in the past, most of the investment will be financed through internal cash flows, Frenzel said.

“But given its size and scale, we will also have to go to market and raise both new debt and new equity capital to fund this plan on a scale that we haven’t had to do before,” Frenzel said. added.

Xcel was also able to secure state and federal grants and incentives, Frenzel said. The company has received nearly $500 million in grants for clean energy projects, and the Department of Energy is considering another $300 million.

Over the past few years, Colorado Utility Consumer Protection Authority accused Xcel of burdening customers with “cheating” rate increase requests by submitting a series of proposed rate hikes for natural gas and electric services in a row. The Joint Legislative Committee held hearings in 2023. on why heat bills from Xcel and other Colorado utilities spiked early in the winter, and sponsored legislation on short- and long-term solutions to keep prices as low as possible.

Cold weather and high wholesale natural gas prices are largely responsible for the doubling or tripling of bills. However, customers and advocates have also criticized the recent rate increases.

Frenzel said Xcel’s energy bills in Colorado are below the national average. “But when I talk to people I’m often told they don’t pay the national average, they pay their own bills and any increase from today is a problem. And we understand that.”

Overall, the average rate Colorado customers paid for electricity in August was 15.65 cents per kilowatt-hour, according to US Energy Information Administration. The national average was 16.63 per kilowatt-hour.

Xcel’s goal is to provide a transition away from fossil fuels “at a reasonable cost,” Frenzel said. Xcel has added solar and wind projects and has more planned. The utility installs battery storage to meet government mandates to reduce greenhouse gas emissions as well as to meet its own goals.

In 2018, Xcel Energy committed to producing 100% carbon-free electricity by 2050. The company will shut down all of its coal-fired power plants by the end of 2030. It expects to meet or exceed its emissions reduction target of 80% below 2005 levels. % by 2030.

Kenney said adding wind power to Xcel’s system has saved customers about $700 million in fuel costs over the past five years.

In addition to trying to meet the growing call for electrification of transportation and buildings, Xcel is preparing to meet growing demand for data centers, which contain computers that support the Internet. As the use of artificial intelligence grows, there is a desire to create ever larger objects.

During Xcel’s conference call, Frenzel said Xcel Energy has “nearly 9,000 megawatts of opportunity in our customer portfolio through 2030” to power data centers. The company expects to sign about a quarter of its prospects over the course of its five-year plan.

Frenzel said in an interview that about half of Xcel’s data center customer growth will likely occur in Colorado, in part because of the state’s commitment to cleaner energy on the grid. Other factors include the region’s talented workforce and proximity to Denver International Airport, he said.

Concerns about the amount of electricity and cooling water required by data centers have raised concerns among Denver City Council members who were considering incentives to build a new facility in the Elyria-Swansea area. One participant said she was concerned about the potential impact on existing clients due to recent power outages in her area.