How a Large-Load Tariff Works, and What the Minimum Bill Really Means

Most people who hear that a utility has a 'large-load tariff' picture a price list. It isn't one. A large-load tariff is the set of rules a utility uses to decide whether it will build for a very big customer, what that customer has to put up before anyone builds, and who carries the cost if the customer's plans change. The rate per kilowatt-hour is almost the least important part.

Start with the threshold

Every tariff starts by defining who counts as a large load, and the thresholds vary a lot. Xcel Energy's Public Service Company of Colorado applies its large-load tariff to loads of 50 MW and above. AEP Ohio's data center tariff, approved by the PUCO in July 2025, starts at 25 MW and requires a load study fee. Indiana Michigan Power's rules, approved by the IURC in February 2025, apply at 70 MW for a single facility or 150 MW when facilities are aggregated. A project that sits just under a threshold may be handled as ordinary commercial service, so the first question is always which side of the line the load lands on, and whether the utility counts it as one facility or several.

Proof of site control comes before the study

Several utilities now want evidence that the developer controls the land before they spend engineering time on it. AEP Ohio requires proof of site control and an online application. Xcel's Colorado tariff goes further: data center load does not count toward served load until signed interconnection and energy service agreements are in place. If you're shopping for land and haven't closed on it, that ordering matters. A utility study you can't use yet is money spent on the wrong sequence.

What the minimum bill does

The minimum bill is where a tariff stops being a price and starts being a risk allocation. Under a minimum billing demand, the customer pays for a share of its contracted capacity whether or not it uses that power. Michigan's approval of DTE's contracts with Google, announced October 1st, is a clear example: the customer pays for at least 80% of its demand over a 20-year term. The utility has built and financed for that demand, and the minimum bill makes sure the customer covers the cost if the load arrives late or smaller than planned.

I think the minimum bill is the single most important clause to read, because it decides what happens in year six, not year one. The useful questions are how the minimum is calculated (a fixed share of contracted demand, or the highest demand actually reached), how long it lasts, what happens if the customer leaves early, and whether collateral is required and when it can be released.

Four things to check in any large-load tariff

First, the threshold, and whether your project is counted as one facility or several. Second, what must be in place before the utility studies or builds: site control, signed agreements, study fees, and deposits, such as the $120,000 deposit in Xcel's Colorado filing. Third, the minimum billing terms: the percentage, the length of the term, and how the minimum is measured. Fourth, the exit and collateral terms: what it costs to leave, and what security the utility holds in the meantime.

If a utility doesn't have a large-load tariff yet, that is also information. In that situation, the terms will be set in a future proceeding, often with a stakeholder process, and it's worth finding out what that process looks like before assuming any particular outcome. Ordinary economic development rates may not apply to data centers at all, so don't assume they do.

Where to verify

A tariff is a legal document, so verify against the tariff itself and the regulator's order, not a summary, including a summary written by us. Look for the filed tariff sheet, the commission docket number, and the effective date. Check whether the rules are final or still pending. Tariffs change, sometimes within a single year, and a threshold that was accurate last spring may not be today. The Kill Test asks for exactly this kind of dated, sourced evidence, because a rate that is only roughly right can cost a project more than a slow answer.