Colorado’s governor and business leaders are pressing energy regulators to expedite a request by the state’s largest utility company to add 4,500 megawatts of “renewable” and hybrid energy generation before federal credits expire at the end of December.

The move, if approved by the Public Utilities Commission, would potentially saving renewable energy developers up to 30% on construction costs.

At the same time, the commission gave final approval on Wednesday to a $15 billion “just transition” energy resource plan from Xcel, which includes adding more than 6,000 megawatts of new generation and storage.

In total, Xcel is seeking approval to construct approximately 10,000 megawatts of new generation and storage capacity over the next five years.

The company’s original request was for 14,000 to 15,000 megawatts, at a price of about $1.5 billion per megawatt, according to the Common Sense Institute.

“This will likely be the single largest resource acquisition in the history of Colorado and an over $15 billion commitment from customers,” said PUC Chair Eric Blank. “To put this commitment in perspective, the total Excel rate base in Colorado is currently roughly $12 billion.”

On the one hand, commissioners said they are worried that approving such a large request may fail to protect ratepayers from exorbitant power bills. 

On the other hand, business leaders and others maintained that building generating resources for the future is necessary with the rising demand, some of which is due to the development of large, energy-hungry data centers.

Metro Denver area city mayors and business leaders earlier urged the energy regulators to approve the “just transition” request to keep Colorado competitive economically. 

“There is a real risk that if these new uncommitted loads don’t materialize, it will likely substantially raise existing customer rates,” said Blank.

The Common Sense Institute, a non-partisan research organization dedicated to the protection and promotion of Colorado’s economy, said approving only between 200 and 600 new megawatts — as the body indicated in recent proceedings — would result in “large negative impacts.” 

The Metro Mayors Caucus, which represents 38 municipalities across the Denver metro area, sent a letter to the Colorado Public Utilities Commission, asking the regulatory body to support Xcel’s request for new generation. The mayors said Colorado risks power shortages, higher costs, economic slowdowns, and setbacks in clean energy if the capacity request is not approved.

“Large employers like advanced manufacturers, clean technology companies, and data centers require guaranteed power before committing to a site,” said caucus chair, Broomfield Mayor Guyleen Castriotta. “Competitor states such as Texas, Utah, Arizona, and North Carolina are actively building capacity to win these projects. Lost opportunities mean lost jobs, reduced tax base, and diminished competitiveness.”

The Common Sense Institute said that, based on its modeling, capping new capacity at 200 megawatts would cost Colorado 17,800 jobs and reduce the state’s population growth by 20,400 through 2031.

The think tank pointed out in a recent report that the construction trades would suffer the most — potentially to the loss of 3,900 jobs, which is the most of any industry.

Collectively, Colorado would lose $21.8 billion of GDP and $36.7 billion of output through 2031, according to the group. Residents would earn a total of $12.5 billion less in personal income and workers’ average annual earnings would fall by an average of $103 and up to $2,100 in some industries.

On Aug. 22, the Colorado Energy Office, the office of the Utilities Consumer Advocate and Xcel Energy filed a joint motion to the PUC in this proceeding to initiate a “near-term procurement” requesting a procedural schedule and a shortened response time to seven days, which would end Friday.

Meanwhile, on Aug. 1, Polis ordered state agencies to move quickly to beat the tax credit expiration with “strategies to ensure that qualifying, cost-effective renewable energy generation starts construction or is placed in service as quickly as possible, especially to receive federal tax credits and avoid tariff uncertainty.”

The purpose of the fast-tracking “is to integrate maximal clean energy by securing as much cost-effective electric generation under construction or placed in service as soon as possible, along with any necessary electricity balancing resources and supporting infrastructure,” the energy commission said in news release on Wednesday afternoon.

Shortening response times means reducing the time those involved in the case have to file responses to the proposal, as well as potentially eliminating public input sessions, allowing the commission to make a decision by Sept. 8.

The federal tax credits expire on Jan. 1, 2026 for projects not placed in service. Projects must begin construction before July 4, 2026 to receive the full 30% credit over 10 years. This means, according to the Internal Revenue Service, that “significant on-site or off-site work, e.g., foundation excavation or component manufacturing under binding contracts” must take place before the deadline.”

The commission summarized the situation in its news release, saying Xcel is planning for the amount of electricity it will need to serve its customers over the next five years. The plan includes resources the energy company said are necessary to replace retiring coal plants, along with determining assistance payments for communities affected by the plant closures.

One notable exception to its list of resources is nuclear energy. Once in a state of legal limbo, recent legislative action has placed it among sources of “clean” energy. However, industry experts said the new small modular reactor technology may not be ready for deployment.

“The JTS proposal reflects a significant increase in electricity demand that is a departure from decades of nearly flat growth,” the Public Utilities Commission said in its news release, referring to the “just transition” request. “Data centers are one driver of this increase, as is home electrification, growth in electric vehicles, and electrification of oil and gas fields. A final set of complexities is due to increasing resource costs, fluctuating U.S. tariff policies, supply chain constraints, and the repeal of federal tax credits.”