Xcel said a nearly $8M land sale was a good deal for ratepayers. The buyer flipped the land to Amazon for $73M.

Last April, Xcel Energy sold 348 acres of land in Becker, Minn., for $7.7 million to a mysterious company promising an enormous and lucrative data center.

Xcel did not hold a competitive bidding process, but said the price was fair and profit from the deal would be returned to customers in the form of a bill credit.

Seven months later, that developer sold the land to Amazon for $73.5 million, or nearly 10 times the price that Xcel obtained.

The original deal — approved by Minnesota utility regulators — now has some asking if Xcel should have won a bigger payday for its customers and is raising questions of transparency.

“It’s disappointing to see that Xcel ratepayers might have received many millions of dollars more in this land sale,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, a nonprofit consumer watchdog. “It sure would have been nice to have that $65 million, especially when Xcel is asking to raise rates yet again.”

Xcel said the sale was based on appraisals and market conditions at the time but the scarcity of data center sites has escalated prices. It also wanted to land a data center on the property in Becker, which it said would yield benefits beyond profit from the land sale.

That means jobs and tax revenue for an area losing both when Xcel’s coal plant in Becker closes in 2030. Xcel could also reap the rewards of selling energy to the data center, which can lower costs for customers.

Still, Minnesota Public Utilities Commission spokeswoman Cori Rude-Young said the spike in land price “is noteworthy and warrants further inquiry.” She also said the PUC was unaware that the land would be resold when the commissioners voted for the initial deal.

The episode is the latest example of Minnesota’s power companies and regulators confronting a rush for land by tech companies willing to pay huge prices to set up energy-hungry data centers.

Xcel’s 348 acres was being used as a buffer around its Sherco coal plant in Becker, which is closing in phases by 2030. The company chose to sell the property after deciding it didn’t need that buffer for safe operations.

After a pair of appraisals and what it said was years of unsuccessful marketing during the pandemic, Xcel struck a deal in 2022 with a company named Elk River Technologies.

In September of that year, Xcel asked the PUC to approve a roughly $7.7 million sale, which matched a recent appraisal by the firm Patchin Messner Valuation Counselors in Burnsville.

At the time, Xcel said Elk River Technologies wanted to develop a $1 billion data center, but the two sides would not disclose the parent company of the buyer.

Xcel said the deal was in line with the company’s efforts to foster economic development in the area. The possibility of extra revenue for the power company and reduced bills for customers was also enticing.

Nobody opposed the sale at the PUC. The city of Becker and Sherburne County backed the transaction, and so did three major trade unions and the Minnesota Department of Commerce, which represents consumers at the commission.

Still, the recommendation from Commerce came with a caveat. The state agency wanted Xcel to use competitive bidding when selling other surplus land at Sherco.

That could result in greater value for Xcel customers, Commerce argued, even if the highest bidder is not Xcel’s top choice.

The idea gained some traction at the PUC.

“I think that ratepayers need to be assured that there is a competitive price that [the properties] are being sold at,” said PUC vice chair Joe Sullivan during a March 2023 hearing.

Xcel balked at the idea. It said the highest bidder might be a buyer that would not bring the benefits of a data center.

Becker City Administrator Greg Lerud told the PUC that a competitive bidding process could result in a company buying the land, holding it without making improvements “only to sell it later as a profit.”

By contrast, Xcel told the PUC that Elk River Technologies had met due diligence milestones for a data center. And their contract stipulated that Elk River Technologies was buying the property “with the sole intent of developing it for data center use.”

The PUC approved the sale on a 4-0 vote without requiring future competitive bids. At the meeting, Chair Katie Sieben said the PUC should respect the wishes of city and county officials as long as the land sale was consistent with “returning full appraised value back to ratepayers.”

Xcel brought in about $7.5 million in profit — split among customers in Minnesota and the Dakotas — once the sale closed in April 2024.

Elk River Technologies did not build a data center afterward. It sought a new buyer who would.

That was a fact the PUC did not know when it voted on the deal. Nor did the PUC know the true nature of Elk River Technologies.

Only later did Elk River Technologies reveal it was a subsidiary of Kansas-based engineering and construction firm Black & Veatch, which has also consulted in the past for Xcel on operations at the Sherco coal plant.

“It shows that a lot more transparency is needed in future deals like this,” said Levenson-Falk of the Citizens Utility Board. “And it’s a strong point in favor of allowing competitive bidding, so utility ratepayers are paid a fair value — just like, if I wanted to sell my own house, I would put it on the market.”

Bruce Anderson, a spokesman for Black & Veatch, said the company “spent years developing the site,” spending money on infrastructure work and assessment for wells, road relocations, water rights, electrical access and pipelines along with “relevant studies and the completion of a large number of entitlements.”

The sale price reflected those costs and improvements, he said.

Lerud, the Becker city administrator, said that Elk River Technologies did not make any improvements to the land, nor submit any plans to the city and, from his perspective, did not accomplish other notable legwork with Becker.

“Our conversations with [Elk River Technologies] were basically kind of preliminary design and engineering infrastructure needs and so forth,” he said. “I don’t know how valuable that was to Amazon, that work.”

Black & Veatch is not alone in hoping to buy and sell land to a Big Tech company. Tract, a Colorado company, is eyeing huge data center sites in Farmington, Cannon Falls and Rosemount.

That’s a common arrangement, said Andy Cvengros, who co-leads the data center practice for the Chicago-based real estate firm Jones Lang LaSalle.

Cvengros said power availability is what’s most important to data center companies. So there are “flippers” who arrange costly studies with utilities that prove a huge data center can get the electricity it needs, along with arranging other necessary groundwork like zoning.

Tech companies are then willing to pay a big premium on the property value, Cvengros said.

“The data center operators, they’re buying power, they’re not buying land,” he said. “Land is whatever, it’s a rounding error in the grand scheme of things.”

It’s also clear that land near the Sherco plant is prime real estate for data center companies.

In February 2024, Xcel sold a smaller 295-acre property in Becker directly to Microsoft for a data center project. The price was $17.7 million. That sale did not need PUC approval and the cash went back to the company because the property was regulated differently, said Xcel spokesman Theo Keith.

Cvengros said there is significant demand for land near electric infrastructure like substations and big power lines.

Xcel is building one of the largest solar farms in the country on site, along with electric infrastructure, and is planning a power line to tap renewable electricity in southwest Minnesota. Xcel also proposed a new gas plant on the other end of that transmission project.

Lerud said the city is happy with the outcome in Becker. Amazon plans to build a data center, and an enormous one at that.

“We’re excited to see that size of a company make a commitment like that to our community,” Lerud said.

But he was nevertheless surprised to see Amazon’s purchase price. He’s not alone.

“That’s quite a markup,” said Bruce Messelt, the Sherburne County administrator.

Messelt said from the perspective of an Xcel customer facing a “pretty significant rate increase” proposed recently by the company, it’s fair to question whether Xcel should have sold for a higher price.

Late last year, Xcel asked the PUC to increase its revenue from customers by hundreds of millions, seeking to raise electric rates 9.6% in 2025 and another 3.6% in 2026.