---
title: "Xcel's 780-megawatt Google deal pays even if the AI boom cools; both bets wait on one Minnesota ruling"
description: "Xcel Energy has put two bargains before one Minnesota regulator: Google's 780-megawatt data center deal and a rate freeze funded by pulled-forward tax credits. The commission answers the freeze by January; earnings land October 29."
publisher: "The Inference"
section: "Energy"
published: 2026-10-19T18:26:22.639Z
modified: 2026-10-19T18:26:22.639Z
canonical: https://theinference.org/article/xcel-s-780-megawatt-google-deal-pays-even-if-the-ai-boom-cools-both-bets-wait-on-one-minnesota-ruling
language: en
keywords: "Energy, Data Centers, Google, Xcel Energy, Utilities, Regulation"
---

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

> Xcel Energy has put two bargains before one Minnesota regulator: Google's 780-megawatt data center deal and a rate freeze funded by pulled-forward tax credits. The commission answers the freeze by January; earnings land October 29.

Two bets on the AI power boom now sit in one inbox: the Minnesota Public Utilities Commission's. [Xcel Energy](https://theinference.org/markets/companies/xcel-energy), the Minneapolis utility operating across eight Western and Midwestern states, needs the commission to approve [a 780-megawatt Google data center in Pine Island](https://theinference.org/article/google-s-minnesota-data-center-xcel-counts-1-1-billion-in-savings-the-watchdog-counts-1-billion-in-costs), 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](https://www.cnbc.com/2026/10/19/how-data-centers-are-reshaping-americas-aging-grid-pine-island-minnesota-google.html) [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](https://theinference.org/markets/companies/alphabet) 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](https://theinference.org/article/xcel-filed-a-texas-tariff-to-lock-data-centers-into-15-year-contracts-with-exit-fees) [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].

*Chart: **Google would finance more supply than its data center can draw** Bar chart ranking megawatts in the proposed Google-Xcel agreement: wind 1,400 MW, data center demand 780 MW, battery storage 300 MW, solar 200 MW*

*Capacity in megawatts under the proposed agreement, which awaits Minnesota Public Utilities Commission approval. Source: CNBC, October 19, 2026. [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](https://www.sec.gov/Archives/edgar/data/72903/000007290326000175/xel-20261009.htm) in place of [the rate case it had prepared](https://theinference.org/article/xcel-s-billing-mess-meets-the-rate-case-that-funds-its-data-center-build), funded by accelerating federal investment tax credits from five battery projects [2][4]. Xcel still plans to [spend $4.5 billion in Minnesota over two years](https://newsroom.xcelenergy.com/news/xcel-energy-seeks-rate-stability-for-customers-through-2028), 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](https://www.mprnews.org/story/2026/10/18/electric-rate-hikes-could-be-delayed-2-years-with-new-xcel-energy-proposal) drew thousands of opposing comments and a statewide affordability investigation [5].

*Chart: **Xcel's quarterly capital spending has risen from about $1.6B to $3B** Line chart of Xcel Energy quarterly capital expenditure rising from $1.64B in Q3 2023 to a peak of $3.44B in Q4 2025 and $2.95B in Q2 2026*

*Quarterly capital expenditure in billions of US dollars, Q3 2023 through Q2 2026, as reported in Xcel Energy's SEC filings. Source: Xcel Energy quarterly filings via SEC EDGAR, retrieved October 19, 2026. [8]*

## The attorney general sees ratepayers holding the risk

Keith Ellison, Minnesota's attorney general, [told the commission on October 1](https://www.mprnews.org/story/2026/10/03/pine-island-data-center-raises-electricity-cost-concerns-from-attorney-general-keith-ellison) 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](https://finance.yahoo.com/sectors/energy/articles/google-data-center-deal-save-140400948.html) [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](https://www.rackline.news/story/en7ckg), 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.

## Takeaway

Google's 780-megawatt Minnesota deal pays Xcel even in a downturn: a 75 percent minimum take and up to eight years of exit charges. But both it and Xcel's tax-credit-funded rate freeze wait on one regulator, with an answer due by January.

## Sources

1. [CNBC, "Google says it can build data centers the right way. Some experts and residents are skeptical," 19 October 2026](https://www.cnbc.com/2026/10/19/how-data-centers-are-reshaping-americas-aging-grid-pine-island-minnesota-google.html)
2. [Xcel Energy and Northern States Power Company, Form 8-K, Item 8.01, filed 9 October 2026](https://www.sec.gov/Archives/edgar/data/72903/000007290326000175/xel-20261009.htm)
3. [Xcel Energy Newsroom, "Xcel Energy seeks rate stability for customers through 2028," 12 October 2026](https://newsroom.xcelenergy.com/news/xcel-energy-seeks-rate-stability-for-customers-through-2028)
4. [Rackline, "Xcel's bid to freeze Minnesota rates sets up a January decision and a fallback 2027 rate case," 17 October 2026](https://www.rackline.news/story/en7ckg)
5. [MPR News, "Electric rate hikes could be delayed 2 years with new Xcel Energy proposal," 18 October 2026](https://www.mprnews.org/story/2026/10/18/electric-rate-hikes-could-be-delayed-2-years-with-new-xcel-energy-proposal)
6. [MPR News, "Ellison: Google's Pine Island data center could cost Minnesotans millions for electricity," 3 October 2026](https://www.mprnews.org/story/2026/10/03/pine-island-data-center-raises-electricity-cost-concerns-from-attorney-general-keith-ellison)
7. [Yahoo Finance, "Google Data Center Deal Will Save Xcel Energy Customers Up To $1.5 Billion Over 15 Years," 6 June 2026](https://finance.yahoo.com/sectors/energy/articles/google-data-center-deal-save-140400948.html)
8. [Xcel Energy quarterly figures from its SEC filings, retrieved 19 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000072903)


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Xcel's 780-megawatt Google deal pays even if the AI boom cools; both bets wait on one Minnesota ruling — The Inference. Canonical: https://theinference.org/article/xcel-s-780-megawatt-google-deal-pays-even-if-the-ai-boom-cools-both-bets-wait-on-one-minnesota-ruling