Chair of the PUC talks about uncertainty of demand, data centers, and how distributed storage may provide the best value in metropolitan Denver
by Allen Best
Eric Blank has a very big picture to keep track of. Since 2020 he has chaired the Colorado Public Utilities Commission, which is responsible for regulating the state’s investor-owned utilities.
The PUC is a place of arcane matters having to do with rates charged to consumers. It is also a key fulcrum for determining how Colorado achieves its goals of reducing carbon emissions in an affordable and reliable manner.
An economist and lawyer by training, Blank worked early in his career at Western Resource Advocates, an environmental advocacy group then known as Land and Water Fund of the Rockies.
Beginning in 2001, he worked in the private sector at several renewable energy companies, focusing on both wind and solar. From 2009 to 2018 he was at Community Energy Solar, a company he co-founded and co-owned. The company developed what were then the largest operating solar facilities in several parts of the country, including the Midwest, the Mid-Atlantic, Georgia and Colorado. The company was also part of the first wave of battery storage.
The energy transition, even within Colorado, involves many billions of dollars and has many points of tension. Picture a gigantic jigsaw puzzle, but not one with a static image. This one has an evolving image.
The challenge is not only to reduce and ultimately eliminate all greenhouse gas emissions as new technologies and business models evolve. Now, Blank and the two other PUC commissioners — Megan Gilman and Tom Plant — must also evaluate the potential for explosive growth in demand, most of it from data centers, after a lengthy period of virtually no growth, all in an environment characterized by climate extremes, volatile prices, and unpredictable federal policies.
During an interview in September at ReCharge, the national energy storage conference in Aurora sponsored by American Clean Power, Blank talked about the giant question mark posed by data centers. He also emphasized the need for flexibility in the evolving energy system.
Blank also said that he wishes Colorado legislators would create a better alignment of incentives for utilities where earnings growth didn’t depend so directly on rapidly expanding capital spending. Reducing costs could then slow the rate increases to electrical customers of utilities regulated by the PUC.
How much “stuff” is really needed?
Xcel Energy is by far Colorado’s largest energy utility, alone responsible for more than 50% of all electricity sold in Colorado, with 1.6 million customers for its electricity plus 1.5 million customers for its natural gas. Formally called the Public Service Co. of Colorado in PUC filings, the company in late 2018 announced its embrace of decarbonization goals. State legislators in successive months formally adopted those goals/mandates.
In this new conversation about data centers, Blank and his two fellow commissioners must decide how much new infrastructure they should allow Xcel to build in response to still-uncertain demand.
In other words, does Xcel need all this new “stuff” — a word you will never see in a PUC filing — that it wants to build?
The “stuff,” be it gas plants or wind farms or transmission lines, matters in part because the investments become part of what is called rate base. That rate base is part of the calculus used to determine how much Xcel can charge its customers. The more money Xcel has invested in stuff, the greater the justification — and some would say excuse — to charge customers.
“For the last 15 years in Colorado, we’ve seen retail sales growth of 0.3% for the regulated utilities,” said Blank, referring to Xcel and the much smaller Black Hills Energy. “We have a decent amount of growth in customers, but per customer usage is declining.”
Xcel Energy has identified needs for great investment in infrastructure to transmit and distribute electricity in coming years. A key question for PUC commissioners is how much is truly necessary and whether such things as virtual power plants can eliminate some of that need. Big Pivots photo
Xcel, beginning in its October 2024 report to the PUC, has forecast giant and sustained growth in retail sales, about 70% of it from new data centers during times of peak demand, with the rest from electric vehicles and building electrification.
Now, Xcel is forecasting growth in electrical demand of 4% per year. “So 10 times faster than anything we’ve seen before,” he said.
“The problem is that we haven’t seen much, if any, of that sales growth yet in 2025 or the first two quarters of 2026,” Blank said at the conference. “Retail sales on a weather-adjusted basis were actually down.”
At the same time, capital spending tripled between 2021 and 2025 and in 2025 was over $5 billion. That compares with a total rate base of $8 billion when he joined the commission in 2020.
“So we’ve seen the capital spending increase way more quickly than the sales growth, such that electric rates in Colorado are now growing two to three times faster than inflation over the last two to three years.”
Blank did not mention that much of this investment by Xcel was geared toward preparing for the closure of its coal-burning plants and, in the case of Pawnee, retrofitting it to burn gas.
In a follow-up exchange with Big Pivots, he clarified that some of this capital spending was clearly necessary to support the clean energy transition and generally has been highly cost-effective in offsetting fuel and other costs of coal plants now being retired.
More recently, however, an increasingly greater share of the capital spending is going to build new generation, transmission and distribution to serve the forecasted load growth during an extremely narrow set of peak demand hours, perhaps as few as 150 to 200 hours per year, particularly within the transmission-constrained Denver metro area.
The uncertainty of data centers
Data centers — especially the hyperscale data centers that need 50 megawatts of power and cover a minimum 10,000 square feet — are at the heart of the uncertainty about future demand. Colorado is unsure whether it wants to roll out a red carpet or slam the door shut, or maybe something between.
For their part, data center developers aren’t too sure about coming to Colorado when other states, at least until recently, were so much more welcoming. As of April, according to the National Conference of State Legislatures, 38 states provided tax exemptions or waivers on qualifying data center equipment through dedicated incentive programs.
That includes Wyoming, where a great many data centers have been built or are being built along I-80 in the Cheyenne area. Google recently announced it was planning to spend up to $17 billion in the Cheyenne area. This is on top of 10 data centers already in operation and more than a dozen being planned, according to WyoFile.
“For hyper-scalers, that may be the single biggest thing they’re looking for: speed to market and a favorable tax structure,” said Blank.
Data centers have become controversial in Colorado, as elsewhere across the country, even when not located cheek to jowl with residential neighborhoods, as is the case with in Denver’s Elyria-Swansea neighborhood. CoreSite’s data center can be seen in the background. For the Colorado PUC, the key question about how much electricity data centers will need remains speculative. Photo/Allen Best
As recently as January, at least a few Colorado state legislators professed to believe that incentives would be good. That bill never got out of its first committee. A rival bill, one with high guardrails, also never got quite that far. See: “Why did this data center bill die?” Big Pivots, May 13, 2026. Meanwhile, Google is among those saying that it needs the tax breaks in Colorado, a company representative told electrical cooperative directors at a forum last week. See: “Crazy times in Colorado’s energy world,” Big Pivots, Nov. 4, 2026.
This ground has shifted. In September, S&P Global reported that eight states from May through August had paused or repealed sales tax exemptions for data centers. There is some evidence that data centers are part of the pushback against the presidency of Donald Trump reflected in the November 2026 election.
Governor-elect Phil Weiser has refused to affirm total bans on data centers. There are times and places, if they can be backed by renewable generation, he told supporters in May, a position he has iterated several times.
Somewhat apart from the data center uncertainty, Colorado is rapidly adding renewable generation, mostly for Xcel. Blank cited approval of more than 12,000 megawatts of new wind and solar in Colorado. “To put that into context, Xcel’s peak demand is somewhere between 6,000 and 7,000 megawatts,” said Blank. “We’re seeing curtailment (of renewable resources) conservatively of over 10%.”
Storage is a piece of the puzzle. The PUC has approved roughly 3,000 megawatts of lithium-ion batteries. At current levels of wind and solar deployment, the storage has been very effective in reducing curtailment of wind and solar generation, said Blank.
The first 1,000 megawatts of storage produced a capacity value and effective load-carrying of about 60%. At more than 3,000 megawatt-hours of storage, however, the capacity value declines to 20%. That means an additional 100 MW of four-hour storage might be ascribed a capacity value of 20 MW if delivered by natural gas combustion turbines.
One way to think about this might be to imagine being very thirsty. The first glass of water you drink is mightily satisfying. The fifth glass? Not so much and, very likely, not as necessary.
The puzzle of peak demand
Peak demand is another piece of this puzzle of figuring out how much generating capacity is justified. How high will the peaks of electricity demand be and when? This is directly related to how much generating capacity should be available.
But the calculation for determining the extra capacity needed for peak demands, called reserve margins, has been changing. That shift is, at least in part, because of the changed energy technologies.
“When I got on the commission, Colorado had a determinative planning environment,” Blank said. “We looked at the hottest day in the summer or hours on the hottest day. We figured out what demand was. We applied our planning reserve margin, and that was the capacity we needed.”
Today’s planning is more complicated. This is not driven by the hottest day of the year but instead by a more complex calculation involving a broader range of peak demand periods given the likelihood of wind and solar being available along with storage during those hours. The higher-risk times have expanded from maybe four hours on a hot summer day to maybe 150 to 200 hours, some of them during winter. This, he said, will be increasingly true as buildings become electrified.
In turn, this creates need for longer-duration storage, especially during winter. Xcel Energy hopes to achieve this with the 100-hour iron-air storage project at Pueblo. A pilot project testing the efficacy of that technology is now underway in Minnesota.
Also relevant is the need for more transmission across broader areas, to ensure access to wind and solar if those resources are not available or at reduced quantities more locally.
How much investment can be justified? In 2021, the PUC approved roughly 550 miles of new transmission in Colorado at a cost of somewhere between $1.7 to $2 billion.
“Now we’re seeing capital projections for something like over $25 billion for new transmission through 2040 and even more for new distribution,” said Blank.
Is there a better way? This was a storage conference, and of course Blank’s thinking led to storage as a way to avoid some transmission and even more distribution costs in space-tight urban areas. Smaller in size but spread out in in broader areas, this distributed storage might cost more but provide greater value.
“It’s what we should be doing because it’s cheaper and quicker to do distributed storage than it is to build new distribution and transmission in Denver.”
And, of course, like real estate, he said, location matters entirely.
United Power, the Brighton-based electrical cooperative, has invested heavily in battery storage. With its service territory on the northern fringe of the metropolitan area, it has access to less expensive land than is commonly available within much of metro Denver. United is not under the jurisdiction of the Colorado PUC.
Of Xcel’s 1.6 million meters, nearly all lie in metropolitan Denver, with relatively few in places like Sterling, Alamosa and Grand Junction. Like the road of Rome, nearly all of Xcel’s transmission lines in some way lead to Denver. But what if more storage existed within metro Denver itself?
“A megawatt of batteries placed in the eastern plains may be the cheapest on a dollar per kilowatt-month basis,” said Blank. “But if you put it in the Denver metro area, even if it’s a bit more expensive, it has more value. And if you put that same battery inside a distribution-constrained area, you can avoid distribution, transmission and generation.”
Blank offered a third value consideration. For resilient and wildfire mitigation, distribution storage has a value in providing back-up power. “As a former developer who spent over a decade in your shoes,” he told his audience at the ReCharge conference, “my advice is look to the value, not just the cost. And it’s a lot more difficult to develop in Denver or in distribution-constrained areas. But increasingly, that’s going to be the value proposition.”
In other comments during the session, Blank also had this to say:
Better align incentives
In response to questions from the moderator, Politico’s Jason Plautz, Blank said that he would like to see regulation shifted in Colorado to better align incentives, both for customers and for utilities.
“On the utility side, utility earnings reflect capital spending. We’ve seen capacity spending triple. One way or another, we have to find a way to align utility incentives with customer interests.”
That is true on the customer side, too, he said. He cited EV charging during system peaks. Incentives should encourage EV charging when electricity is most available. As is, the pricing does not completely reflect the economics of ensuring the electricity is available.
“The single biggest thing I’d like to see is better align incentives,” he said. “The PUC commissioners have limited power to do so. But I can assure you that the chair of the utility commission is not a king or a queen. We are very constrained in how we move through the process, through decisions on the record, through legal precedent.”
The risk of over or underbuilding?
Plautz wanted to know whether overbuilding the grid or failing to build enough to meet demand posed greater risks.
Overbuilding may be the greater risk given current utility plans, replied Blank, but systems with greater optionality, flexibility and speed to market can be part of the answer.
Plautz pushed back. If they did build the electricity grid, wouldn’t growth then follow?
“If the utility has laid out the capital, they win whether the growth comes or not,” replied Blank. Customers are at risk if it doesn’t materialize.
On virtual power plants
Virtual power plants, as defined by RMI, are collections of small-scale energy resources that, aggregated together and coordinated with grid operations, can provide the same kind of reliability and economic value to the grid as traditional power plants
“We’ve enabled people to competitively bid virtual power plants into the regulatory system. So, in the same way you can get a power purchase agreement for a utility-scale solar facility, we’re now offering similar contracts with similar payment structures for distributed solar, but not solar plus storage or standalone storage. I think we’re on the cutting edge of this (among states),” he said. “But in building distribution lines and distributed storage, they must be better integrated, to avoid excess costs.”
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