Colorado will receive $250 million from the federal government to support a key transmission corridor connecting western states to Texas as part of a national push by the Trump administration to buttress America’s strained energy grid.
Gov. Jared Polis said Thursday that the grant to Colorado — the single largest investment that’s part of — will benefit 10 million ratepayers across Colorado, Texas and New Mexico.
“And what does ‘benefit’ mean? It means increased reliability and lower rates,” Polis said during a news conference at the Arapahoe County Fairgrounds, while flanked by state, federal and private sector energy leaders.
The money will go toward a major Xcel Energy project that will move the Colorado side of the Texas grid connector from its current location in Lamar to the May Valley substation in southeastern Colorado. Doing so, officials say, will better link the country’s western and eastern energy grids.
The federal grant will cover about 20% of the projectap overall $1.2 billion cost, the rest of which Xcel will pay for.
The project includes replacing aging equipment and power lines to support greater energy transmission. Officials say the investments will more than triple the amount of electricity that can move between the two regional grids from 210 megawatts to 700 megawatts — and eventually up to 2,000 megawatts — as demand grows.
The announcement comes as Xcel Energy customers are expected to see a roughly $5 monthly increase to their energy bills in the coming months to help pay for a suite of upgrades to Xcel’s power supply system. The company has also faced a list of complaints from developers over electricity delays for new projects.
Xcel Energy-Colorado President Robert Kenney said modernizing the existing Colorado-to-Texas grid corridor is “first and foremost a reliability project” that’s aimed at replacing “aging infrastructure with modern, proven technology.”
In total, 31 projects across 26 states are slated to receive a slice of the $1.9 billion in federal funding. That will be matched by $3.35 billion from project recipients, resulting in about $5.2 billion in total investments. Together, the projects are expected to produce more than 23 gigawatts of additional electricity capacity — enough to power 16 million homes.
Rather than creating new infrastructure, the money is targeted at rehabilitating the nation’s energy grid.
“These projects are about getting more out of the infrastructure we already have, and doing it faster,” said Tim Walsh, the assistant secretary for the Energy Departmentap Office of Environmental Management.
The projects receiving money nationally will use new technologies such as sensors and other devices to measure real-time weather conditions to ensure safe transmission or direct power away from congested or overloaded paths, the Energy Department said. The upgrades could improve power reliability and lower electricity costs for about 100 million Americans, according to officials.
Walsh said the federal funding awards for power grid upgrades build on President Donald Trump’s “” executive order.
The money comes from the bipartisan Infrastructure Investment and Jobs Act, signed by then- President Joe Biden in 2021, which Trump at the time opposed.
Walsh and other officials stressed that data centers — a growing, power-hungry sector — must pay for their own electricity.
The investments announced Thursday come at a critical time for the nation’s energy grid, which continues to face growing demand driven largely by the artificial intelligence boom and the proliferation of massive data centers.
Walsh said Trump, an avid supporter of AI and data centers, said the administration was focused on “leading the globe in innovation,” which is why the country needs “to increase our AI data centers.”
But, he added: “We’re not putting them where communities don’t want them.”
Kenney said Xcel has a proposal pending before the state’s Public Utilities Commission aimed at ensuring data centers don’t force their energy costs onto consumers.
Will Toor, the executive director of the , added that the Xcel grid project in southeastern Colorado was contemplated even before the rise of large data centers, saying that energy demands had been building for at least a decade.
“We’ve needed expanded transmission and, in particular, we’ve needed expanded interregional transmission linking the Colorado grid and the eastern grid,” he said.
The Associated Press contributed to this story.
