The next iteration of the clean transition tariff may be coming to Colorado. Xcel Energy is pitching the novel tariff, which is currently under review by the state’s Public Utilities Commission, as part of its broader strategy for interconnecting large loads. It’s modeled in large part after the incentive structure that Google unveiled in Nevada roughly two years ago, via its 115-megawatt enhanced geothermal deal with Fervo.
Since regulators approved the original CTT, a growing number of jurisdictions have explored similar approaches. Nevada, however, remains the only place where the framework — which lets a large customer pay extra for power from emerging technologies that would be too challenging or too expensive to develop under traditional utility incentives — has been formally adopted.
But a lot has changed in the years since the CTT was first created. Google, NV Energy, and the geothermal company Fervo built the original tariff around corporate decarbonization goals, and Big Tech’s willingness to help de-risk emerging clean firm generation. Today, utilities looking to develop a CTT must also juggle the reality that, for hyperscalers, speed to power is trumping emissions reductions. And in Colorado, large loads are seeking tweaks to the original framework to accommodate that reality.
For example, though Xcel’s proposed tariff would only cover technologies that meet a threshold of 95% carbon-free power and would exclude wind and solar, other stakeholders are advocating for broadening that scope in a variety of ways to make the tariff more applicable for near-term projects.
In another key distinction, Xcel is pitching a CTT as part of its response to direction from regulators to develop large load tariff and cost allocation rules, as well as the state’s broader clean energy goals and policy focus on ensuring costs aren’t shifted to existing consumers. That’s compared to Nevada, where Google and NV Energy pitched the original CTT as a response to Google’s load growth in the region.
That said, Google has still been closely involved in the development of Colorado’s CTT, a spokesperson told Latitude Media, including advising on foundational design, and also pushing for an evolution beyond the Nevada version. The company wants more nuanced proposals regarding technology eligibility under the tariff, including advanced transmission technologies and distributed energy resources, rather than just supply-side generation. Those technologies aren’t included in the current iteration of Xcel’s plan, but Google plans to propose them, the spokesperson said.
Increasing flexibility
As proposed, Colorado’s tariff does already contain one element Google believes is crucial to adapting CTT for massive load growth: Google’s “capacity commitment framework” — a model under which large loads sign long term agreements backed by collateral and minimum infrastructure charges, in order to give utilities more confidence that the load will materialize, and shield ratepayers from stranded-cost risk.
In an ideal world, the spokesperson explained, new iterations of the CTT will both lock in those long-term commitments and allow large loads to act as a “catalytic” investor in advanced clean energy projects.
It’s an idea Google and Xcel are already testing out in Minnesota. Earlier this year, the company announced a deal to partially power a new Google data center there, using a 300-MW long-duration storage system from Form Energy, as part of a “clean energy accelerator charge.” That deal, currently awaiting approval by the Minnesota PUC, also includes a $50-million commitment from Google to support Xcel’s distributed capacity procurement program.
But that deal isn’t a new tariff, an Xcel spokesperson told Latitude. Rather, it’s a custom arrangement under Minnesota’s existing large load tariff, which allows customers to either pair service with existing clean energy tariff options, or pursue their own deals.
“Xcel Energy plans to file an additional clean energy tariff in Minnesota later this year, but those terms have not yet been proposed,” the spokesperson added.
Designing a ‘CTT-lite’
Clean transition tariff-like proposals have begun to take off around the country. But so far, Google is the only hyperscaler explicitly pushing them along. Google’s spokesperson said that’s partly because the only real proof point so far is Nevada. In Michigan, for example, where Google is working with DTE Energy to fund a mix of energy storage and demand response, the tariff proposal is still moving through the regulatory approval process.
But there is interest behind the scenes, and Google told Latitude Media that it is working on creating a “course curriculum” to educate others about CTTs, and to make it easier for other large loads to follow in their footsteps. That includes creating “CTT-lite” pathways that don’t require the formal creation of a tariff, and can happen without a sophisticated energy team like Google has, the spokesperson explained.
One such simplified pathway includes contracting virtual power plant capacity: A large load customer would pay a premium into a utility’s distributed energy resource and demand-side management programs in exchange for capacity credits.
Google is currently piloting this with NV Energy, where the hyperscaler would over-fund existing programs and receive capacity credit rather than negotiating a full-blown, bespoke tariff. It’s an approach that is similar to Google’s existing partnership with Voltus, in which the hyperscaler contracted up to 100 MW of capacity annually from distributed energy resources in PJM, the spokesperson explained.
Beyond hyperscalers
It’s not just data centers that are closely watching the proliferation of the CTT. The Corporate Energy Buyers Association, which represents a range of commercial and industrial customers in addition to hyperscalers, wants to see different expansions, including using it to fund wind and solar and batteries, among other things.
As proposed, Xcel’s tariff explicitly excludes wind, solar, and four-hour batteries, but CEBA is pushing for an expanded definition that would allow for hybrid solutions combining mature and emerging technologies, Priya Barua, CEBA’s VP of utility partnership and innovation, told Latitude Media.
That would allow other large load customers to take advantage of the tariff, not just data centers, she explained. While hyperscalers have the capital, risk appetite, and technical capacity to back frontier technologies, many companies don’t. If the tariff only works for advanced resources, it effectively becomes a hyperscaler-only solution, instead of a tool the wider large-load segment can realistically use, she added.
The AI boom is just the “first wave” of much broader electricity demand growth across the economy, Barua said. A “durable” CTT should align utility resource planning needs with a wider slice of energy users.
