Public Service Co. of Colorado, a subsidiary of Xcel Energy, has filed a petition with the Colorado Supreme Court requesting a ruling on an eminent domain dispute that is currently blocking two nearly completed wind projects (with a combined capacity exceeding 1 gigawatt) from connecting to the grid.

PSCo stated in its July 31 court filing: "This case involves a statewide issue of significant importance at the intersection of Colorado's eminent domain law, public utility regulation, and clean energy law: whether a regulated electric utility has the right to condemn easements for transmission lines connecting renewable energy generation facilities."

The two wind projects, the 603 MW Singing Grass project and the 450 MW Cheyenne Ridge II project, are part of a PSCo plan approved by state utility regulators in January 2024 to add approximately 6.1 GW of generating capacity to its system.

In June, a district court judge rejected PSCo's request to acquire an approximately 550-foot easement through eminent domain. The easement is needed for the generation tie-line connecting the wind projects to a substation.

Xcel spokesperson Lisa Andersen said in an email to Utility Dive that the ruling "significantly delayed" the two wind projects and "prevents customers from receiving the energy and economic benefits they expect." The cost of the wind projects is confidential information, and Andersen declined to disclose specific amounts to Utility Dive.

According to the latest onshore wind report from Lawrence Berkeley National Laboratory, wind projects installed in 2024 (before Trump administration tariffs broadly increased infrastructure costs) averaged $1.85 million per megawatt. Based on this estimate, the total cost of the two projects would be approximately $1.8 billion.

PSCo is building the two projects near Burlington in eastern Colorado, adjacent to its approximately $1.7 billion Power Pathway transmission project—part of which was designed to provide grid access for renewable energy projects in the area. However, the two wind projects encountered obstacles when connecting to the grid: they need to access the Goose Creek substation via land owned by Dryland Partners.

Landowner representative Brad Haight said in an email to Utility Dive that Dryland Partners "remains open to a market-based solution." He also noted: "The Colorado Public Utilities Commission should be prepared for PSCo to seek recovery of fuel costs and imprudently incurred Allowance for Funds Used During Construction (AFUDC) resulting from the projects' failure to connect to the grid."

Delays and statewide impacts

According to Andersen, PSCo has requested that the Colorado Court of Appeals review the district court judge's ruling, but the case could take more than a year to resolve.

PSCo stated in its request for the state Supreme Court to take the case that the district court ruling would "undermine the legal framework for connecting renewable energy projects to Colorado's grid and delay critical renewable energy development statewide." PSCo said: "If this ruling stands, any landowner controlling the sole access to critical energy infrastructure could dictate access terms, free from any eminent domain constraints, holding renewable energy projects hostage to their private pricing demands and increasing costs for Colorado ratepayers statewide."

However, PSCo stated in a mid-May filing with the Colorado Public Utilities Commission that even before the district court ruling, the wind projects had already experienced delays due to the condemnation proceedings PSCo initiated to obtain land rights to access the Goose Creek substation.

In that filing, PSCo projected that the Cheyenne Ridge II project would be operational in May 2026, with the Singing Grass project following within three months. The report shows that all turbines for the Cheyenne Ridge II project have been installed, and 108 of the 134 turbines for the Singing Grass project have been erected.

PSCo stated that the delays are increasing project costs. The company said in the redacted filing: "The Cheyenne County transmission line permitting delays have created significant additional cost pressures, and the company is incurring substantial standby time and expenses for transmission line construction crews."

According to Andersen, the Cheyenne Ridge II project requires a 5.4-mile tie-line to connect to the substation, while the Singing Grass project requires a 28.8-mile tie-line. The company has obtained rights for nearly the entire length of both tie-lines from over 100 landowners. She said: "Despite years of negotiations, one landowner issue remains unresolved, involving an approximately 550-foot easement, which remains unresolved after extensive efforts to reach an agreement."

What is a transmission line?

The core of the district court case is whether PSCo has the authority to acquire Dryland Partners' land through eminent domain. Cheyenne County District Court Judge Mike Davidson ruled that PSCo's request failed to meet legal requirements.

Colorado law allows utility companies to condemn land for transmission lines. However, Davidson rejected PSCo's claim that the tie-lines between the wind projects and the substation qualify as transmission lines. He noted that PSCo repeatedly referred to these lines as generation tie-lines, not transmission lines, in multiple filings. Additionally, Davidson found that PSCo's negotiations with Dryland Partners lacked good faith.

According to the ruling, in 2022, Dryland Partners sold approximately 90 acres of land to PSCo for $585,000 to build the Goose Creek substation. Subsequently, Dryland cooperated with PSCo in planning the corridor for the required tie-lines. However, PSCo instead attempted to acquire a different parcel of Dryland's land through eminent domain for the interconnection. The court ruling stated that PSCo planned to pay less than $20,000 for this land, preventing the landowner from reaching multi-million-dollar agreements with renewable energy developers.

Davidson stated: "PSCo had identified an alternative generation tie-line route but then disregarded that route and Dryland's years of cooperation, believing it could simply condemn another parcel of Dryland's land. Furthermore, PSCo knew that the route it sought to condemn was Dryland's reserved oil and gas easement, and losing that easement would have significant economic impacts on Dryland."

According to Davidson, Dryland complied with PSCo's requirement to treat all generation developers equally when connecting to the Goose Creek substation. For example, Dryland entered into an interconnection agreement reflecting market rates with NextEra Energy's 500 MW Dusty Rose wind project, allowing it to access the Goose Creek substation.

Davidson stated: "Dryland reasonably believed that PSCo should pay a rate similar to NextEra, because PSCo required Dryland to treat all developers equally. After acquiring the Singing Grass and Cheyenne Ridge II wind development projects, PSCo now acts as a private energy developer, unwilling to pay the fair market price that Dryland established with NextEra."

According to Andersen, the compensation demanded by Dryland Partners is "significantly higher" than agreements reached with other landowners. In addition to resolving the land dispute, PSCo also needs to obtain Cheyenne County permits for portions of the Singing Grass tie-line route. Andersen stated that the county has indicated it will not process the permit until the land rights issue is resolved.

Andersen stated that once permits are obtained, PSCo expects to complete tie-line construction within approximately three months, followed by an additional month of testing before the wind projects can begin delivering power to the grid.