Xcel's 780-megawatt Google deal pays even if the AI boom cools; both bets wait on one Minnesota ruling

Two bets on the AI power boom now sit in one inbox: the Minnesota Public Utilities Commission's. Xcel Energy▼−1.88% — Xcel Energy, down 1.88 percent today, the Minneapolis utility operating across eight Western and Midwestern states, needs the commission to approve a 780-megawatt Google data center in Pine Island, a town of about 4,000 an hour southeast of Minneapolis ¹. The same regulator must also rule on Xcel's plan to freeze Minnesota base rates through 2028, with an answer requested by January ². Both rest on one premise, that data centers will drive most North American demand growth this decade, as the reliability regulator NERC projects↗ ¹.

Google pays even if the boom cools

Google would finance 1,900 megawatts of new supply for the campus: 1,400 MW of wind, 200 MW of solar and 300 MW of batteries, more than the data center draws, because wind and sun idle ¹. The terms are built for a bust. Google▲+1.56% — Google, up 1.56 percent today pays at least 75 percent of contracted capacity even if it uses less, and owes up to eight years of minimum demand charges on an early exit ¹. "Nobody wants to have a big buildout and then have nowhere for that power to go and nobody to pay for that power," said Amanda Rome, Xcel's chief customer officer ¹.

A freeze built on pulled-forward tax credits

The second ask arrived on October 9: Northern States Power, Xcel's Minnesota utility, offered a two-year base-rate freeze↗ in place of the rate case it had prepared, funded by accelerating federal investment tax credits from five battery projects ²⁴. Xcel still plans to spend $4.5 billion in Minnesota over two years↗, led by $1.4 billion for distribution wires and $500 million for its nuclear plants ³. The cushion is one-time, since credits recognized now will not be there in 2029 ⁴. Ratepayers are sore already: a 5.8 percent increase approved in June 2026↗ drew thousands of opposing comments and a statewide affordability investigation ⁵.

The attorney general sees ratepayers holding the risk

Keith Ellison, Minnesota's attorney general, told the commission on October 1↗ that the Google deal could leave other customers paying millions, possibly more than $1 billion, after its 15-year term ends or on an early exit, and noted Xcel redacted most dollar amounts ⁶. Xcel's own June projection claims the reverse, savings of up to $1.5 billion for other customers over 15 years↗ ⁷. Watchdogs add a structural critique: utilities earn roughly 10 percent on new construction, so cheaper hyperscaler capital threatens the model, and smaller data centers sited on spare grid capacity would cut everyone's rates ¹.

The commission can still rewrite both

The commission may approve, modify or reject each piece, and a judge is separately weighing a demand for a fuller environmental review ⁶. Xcel reports third-quarter results on October 29↗, where analysts will press on Minnesota earned returns ⁴. The demand charges put Google's money behind the buildout; the fallback rate case puts Xcel's returns behind the freeze. Google has signed its guarantees. The state has not.