Xcel Energy's Google agreement faces Minnesota AG request to withhold approval
Minnesota's attorney general says Xcel has not shown its Google agreement protects other customers from service and stranded costs.
Ines Halvorsen
On Oct. 1, Minnesota's attorney general asked the Public Utilities Commission to withhold approval of a 15-year electricity agreement signed by Xcel Energy Inc. NASDAQXEL for Google's proposed Pine Island data centre. The office said Xcel's estimate of more than US$1.1 billion in net benefits for other customers could instead be close to US$1 billion in net costs. Google, the 15-year agreement's counterparty and a unit of Alphabet Inc. NASDAQGOOGL, said in February it would pay all costs associated with its electric service.
Shares of Xcel NASDAQXEL rose 1.2 per cent to US$71.40 on Nasdaq at 4 p.m. EDT on Oct. 2.
Xcel announced on Feb. 24 that the agreement would bring 1,900 megawatts of new clean energy to its grid. The planned mix comprises 1,400 megawatts of wind, 200 megawatts of solar and 300 megawatts of long-duration battery storage. The utility said Google would pay for new grid infrastructure and provide US$50 million toward Xcel's distributed battery program.
The attorney general's office said Xcel has not established that Google will pay every cost attributable to the data centre during the agreement's term. It also questioned who would bear the costs of resources built to serve the site after 15 years, or earlier if Google reduced demand or ended service. Xcel's February announcement said the signed agreement requires formal commission approval.
Minnesota Law Requires Stranded-Cost Protections
Under Minnesota's very-large-customer statute, the commission may approve, modify or reject an electric service agreement. It must consider whether attributable costs are assigned to the very-large-customer class and whether other customers are protected from stranded costs. The statute also requires the commission to define each utility's very-large-customer class by Dec. 15.
"The Attorney General’s Office argues the PUC should not approve the ESA unless and until these risks are more fully mitigated and asks that Xcel provide additional information to help develop the record on the extent of these risks," the office said in its Oct. 1 release.
The office also said Xcel redacted almost all dollar values for possible impacts on other ratepayers and did not specifically explain some trade-secret claims. It asked Xcel to justify those designations and remove any inappropriate redactions in a revised filing. The linked initial comments could not be accessed for this report, so the account of the requests and estimates here follows the attorney general's public release.
The office's net-cost estimate concerns the proposed allocation of service costs. It separately warned that other customers could face billions of dollars in resource costs once the 15-year agreement ends, with greater risk if Google terminates early. Those are the office's projections, and neither company's February announcement states a price per megawatt-hour.
Google's February announcement describes the 300-megawatt storage component as an iron-air battery system. Xcel said it would have 30 gigawatt-hours of capacity, but its Feb. 24 release gives no commissioning date for that equipment. The cost dispute therefore sits ahead of a buildout whose delivery dates have not been specified in the public announcements.
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The attorney general's Oct. 1 release gives no date for a decision on the Xcel-Google agreement. Under the same statute, the commission must define very-large-customer classes for each utility by Dec. 15.
