2023 Colorado Revised Statutes › Title 40 - UTILITIES (§§ 40-1-101 — 40-43-104) › PUBLIC UTILITIES (§§ 40-1-101 — 40-17.5-105) › GENERAL AND ADMINISTRATIVE (§§ 40-1-101 — 40-9.8-104) › Article 3.2 - AIR QUALITY IMPROVEMENT COSTS (§§ 40-3.2-101 — 40-3.2-210) › Part 1 - GENERAL PROVISIONS (§§ 40-3.2-101 — 40-3.2-110) › Section 40-3.2-109 - Beneficial electrification plans for electric utilities - definition - rules - recovery of costs - report

(1)
Definition.
As used in this section, "beneficial electrification plan" or "plan" means an electric utility's plan to increase beneficial electrification in the residential, commercial, and industrial sectors for purposes other than transportation.
(2)
(a)
The commission shall allow an investor-owned electric utility to implement cost-effective beneficial electrification plans that support voluntary customer adoption of beneficial electrification measures.
(b)
On or before July 1, 2022, and thereafter as directed by the commission, but no less frequently than every three years, an investor-owned electric utility shall file with the commission an application for a beneficial electrification plan for regulated activities to support beneficial electrification. Beneficial electrification plans may be combined with other demand-side management strategic issues or transportation electrification plans, as applicable, but a beneficial electrification plan must, at a minimum:
(I)
Include proposed programs to advance beneficial electrification for residential and commercial customers. Plans may also include programs to advance beneficial electrification for industrial customers.
(II)
Include programs targeted to low-income households or disproportionately impacted communities, with at least twenty percent of the total beneficial electrification program funding targeted to programs that serve low-income households or disproportionately impacted communities;
(III)
Include budgets; targeted numbers of installations; projected fuel savings; projected cost-effectiveness calculations, including the social cost of methane and carbon dioxide emissions and an appropriate social discount rate in the cost-benefit analysis; projected reductions in greenhouse gas emissions; and other information deemed relevant by the commission for the plan as a whole and for each program included in the plan;
(IV)
Demonstrate that the utility will, to the greatest extent practicable, serve incremental load attributable to beneficial electrification with generation that can be reasonably expected to have a carbon intensity no higher than the average carbon intensity for all generation in the utility's portfolio;
(V)
Include incentives to facilitate beneficial electrification, with programs targeted toward new and existing building markets. Products eligible for incentives must be certified under the federal Energy Star program, as defined in section
6-7.5-102 (24)
, or a successor program if that certification is available, in product categories for which such certification exists.
(VI)
Include an outreach plan for engagement with customers in low-income households and disproportionately impacted communities to develop programs to support those customers in every phase of the utility's beneficial electrification programs, including through incentives offered to multifamily buildings occupied in full or in part by low-income households; and
(VII)
Include documentation and data to show that the utility's beneficial electrification plan is consistent with maintaining the reliability of the electric grid.
(3)
The commission and investor-owned electric utilities subject to commission jurisdiction shall:
(a)
Incorporate into the cost-benefit analysis of beneficial electrification plans and programs:
(I)
The social costs of carbon dioxide and methane emissions, including the avoided carbon dioxide emissions from the direct combustion of fossil fuel in appliances or industrial equipment that is replaced with electricity;
(II)
The avoided upstream emissions of methane from the production and delivery of fossil fuel to the appliance or equipment;
(III)
The incremental carbon dioxide emissions from generation of electricity; and
(IV)
The incremental load attributable to beneficial electrification;
(b)
Use the methodology defined in section
40-3.2-106 (4)
to determine the cost of carbon dioxide emissions;
(c)
Base the cost of methane emissions on the most recent assessment of the global social cost of methane developed by the federal government, using a discount rate of two and one-half percent or less; except that, beginning on September 7, 2021, the commission shall use a social cost of methane of not less than one thousand seven hundred fifty-six dollars per short ton. The commission shall modify the social cost of methane based on escalation rates of the 2020 base cost by an amount that is equal to or greater than the escalation rates established in the addendum to the technical support document and shall use a discount rate that does not exceed the lesser of two and one-half percent or any lower value established by the most recent available successor to the technical support document.
(d)
Include upstream leakage of methane emissions in the extraction, production, and transportation of fossil gas in the cost-benefit analysis if the air quality control commission determines an estimate for upstream methane leakage.
(4)
Notwithstanding any other provision of law, the commission shall allow an electric utility to offer incentives to its customers to replace gas appliances with high-efficiency electric appliances.
(5)
(a)
The commission shall allow an electric utility to recover its prudently incurred costs, on a current basis, for implementation of approved beneficial electrification programs.
(b)
The commission may provide an electric utility an opportunity to earn incentives for exceeding beneficial electrification targets or emission-reduction performance targets that the commission has established for the beneficial electrification plan. For purposes of implementing this subsection (5)(b), the commission may consider incentive mechanisms to promote the advancement of the utility's beneficial electrification programs, which incentive mechanisms may include:
(I)
An incentive rate of return on beneficial electrification investments;
(II)
An incentive to allow the utility to accelerate depreciation;
(III)
An incentive to allow the utility to retain a portion of the net economic benefits of beneficial electrification;
(IV)
An incentive to allow the utility to collect the cost of beneficial electrification programs through a rider or cost adjustment clause; or
(V)
Any other incentive mechanism the commission deems appropriate.
(6)
(a)
By April 1, 2024, and thereafter as determined by the commission but no less frequently than every six years, an investor-owned electric utility shall file an application for a beneficial electrification strategic issues filing that proposes a ten-year beneficial electrification target and objective criteria for measuring progress toward attainment of the target, which criteria may include the level of substitution of renewable sources for fossil fuel or the level of reduction in greenhouse gas emissions. The commission shall approve or amend and approve the utility's application, taking into account the utility's potential for cost-effective beneficial electrification, the state's greenhouse gas pollution reduction targets, and the potential for beneficial electrification to reduce greenhouse gas emissions.
(b)
The beneficial electrification strategic issues filing may be combined with other demand-side management strategic issues or related filings as appropriate, and an investor-owned gas utility may file with the commission an application for a beneficial electrification plan for regulated activities to support beneficial electrification as part of such a proceeding or as a separate application. A beneficial electrification plan filed by an investor-owned gas utility is eligible for the same treatment as a beneficial electrification plan filed by an investor-owned electric utility pursuant to this section.
(7)
The electric utility or other entity commissioning a beneficial electrification project shall ensure compliance with the labor standards set forth in section
40-3.2-105.6
.
(8)
Each electric utility that implements a beneficial electrification plan shall submit to the commission an annual report describing the beneficial electrification programs implemented under the plan and documenting:
(a)
Program expenditures, energy savings, incremental additional electric load attributable to approved beneficial electrification programs, and incremental additional greenhouse gas emissions associated with beneficial electric load attributable to approved beneficial electrification programs;
(b)
Assumed avoided greenhouse gas emissions from other sectors resulting from approved beneficial electrification programs;
(c)
Societal costs and benefits of approved beneficial electrification programs as well as the techniques used to calculate those impacts;
(d)
Compliance with the labor standards set forth in section
40-3.2-105.6
; and
(e)
Any other information that the commission requests.
(9)
Municipally owned electric utilities, cooperative electric associations, and wholesale electric cooperatives, as defined in section
40-2-134
, in Colorado are encouraged to:
(a)
Develop beneficial electrification plans as addressed in this section and transportation electrification programs pursuant to section
40-5-107
that help their customers invest in beneficial electrification in buildings and transportation;
(b)
Account for the social cost of carbon dioxide and methane emissions, set total energy savings and greenhouse-gas-emission-reduction goals, and implement beneficial electrification programs for their customers;
(c)
Include a beneficial electrification plan or transportation electrification program as part of a clean energy plan; and
(d)
Participate in statewide or regional initiatives to increase the availability of, develop the market for, and support contractor training on high-efficiency electric technologies.
(10)
In implementing this section, the commission shall not require the removal of gas-fueled appliances or equipment from any existing structure or ban the installation of gas service lines to any new structure.
Amended by 2023 Ch. 285,§ 12, eff. 8/7/2023.
Amended by 2022 Ch. 421, § 87, eff. 8/10/2022.
Added by 2021 Ch. 283, § 5, eff. 9/7/2021.
L. 2021: Entire section added, (SB 21-246), ch. 1677, p. 1677, § 5, effective September 7.
2023 Ch. 285, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
2022 Ch. 421, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
2021 Ch. 283, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
For the legislative declaration in SB 21-246, see section 1 of chapter 283, Session Laws of Colorado 2021.