Minnesota Tightens Safeguards to Protect Households from Large Power Demand Costs

The Minnesota Public Utilities Commission on May 18 approved a broad set of safeguards governing how Xcel Energy may serve future high-demand electricity customers, including data centers and industrial facilities, as Minnesota prepares for rapid growth in electricity demand.

The action implements a state law requiring very large customers to pay the full costs associated with serving their operations while ensuring the utility continues meeting Minnesota’s renewable-energy and carbon-free electricity standards. Regulators approved Xcel’s proposed tariff framework but strengthened several provisions following recommendations from the Minnesota Office of the Attorney General and the Citizens Utility Board aimed at improving transparency and protecting residential and small-business customers from potential cost increases.

The commission established a new customer class for very large electricity users rather than placing them within the existing commercial and industrial category. Regulators determined the separate class would improve cost allocation and reduce the risk of cross-subsidization between customer groups.

Under the decision, very large customers are defined as new loads of at least 100 megawatts. The framework also applies to customers with loads between 20 megawatts and 100 megawatts if their projects require substantial transmission or distribution upgrades before service begins. The provision targets energy-intensive facilities that may place significant strain on the grid even at lower load levels.

The commission also strengthened Xcel’s cost recovery framework by requiring the utility to provide clearer assumptions, supporting data, and cost estimates to demonstrate that large customers fully cover generation, transmission, and infrastructure expenses created by their operations.

Regulators approved a 15-year default contract term and increased the minimum bill and exit-fee requirement to 80 percent of contracted capacity. The measure is intended to prevent infrastructure costs from shifting to other ratepayers if large customers reduce electricity use or terminate service early.

The order further requires all transmission and distribution upgrades tied to these projects to be funded directly by the customers. Xcel also must demonstrate that service to each new large customer aligns with Minnesota’s clean-energy goals without delaying broader decarbonization efforts.