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 2 - PUBLIC UTILITIES COMMISSION - RENEWABLE ENERGY STANDARD (§§ 40-2-101 — 40-2-203) › Part 1 - GENERAL AND ADMINISTRATIVE PROVISIONS (§§ 40-2-101 — 40-2-139) › Section 40-2-125.5 - Carbon dioxide emission reductions - goal to eliminate by 2050 - legislative declaration - interim targets - submission and approval of plans - definitions - cost recovery - reports - rules

(1)
Legislative declaration.
The general assembly finds and declares that:
(a)
It is a matter of statewide importance to promote the development of cost-effective clean energy and new technologies and reduce the carbon dioxide emissions from the Colorado electric generating system;
(b)
The creation of a low-cost, reliable, and clean electricity system is critical to achieving the level of greenhouse gas emissions necessary to avoid the worst impacts of climate change and advancing a robust and efficient low-carbon economy for the state of Colorado and the nation;
(c)
Technology advancement has already allowed Colorado to achieve reductions in carbon dioxide emissions from the electric utility sector, and continued technology development is key to extend progress toward a reliable, low-cost, clean energy future;
(d)
Alternative financing mechanisms may result in lower costs to electric utility customers; therefore, it is helpful to provide alternative financing mechanisms that utilities may use to reduce the total amount of costs being included in customer rates resulting from accelerating the retirement of electric generating facilities; and
(e)
A bold clean energy policy will support this progress and allow Coloradans to enjoy the benefits of reliable clean energy at an affordable cost.
(2)
Definitions.
As used in this section, unless the context otherwise requires:
(a)
"Clean energy plan" means a plan filed by a qualifying retail utility as part of its electric resource plan to reduce the qualifying retail utility's carbon dioxide emissions associated with electricity sales to the qualifying retail utility's electricity customers by eighty percent from 2005 levels by 2030, and that seeks to achieve providing its customers with energy generated from one-hundred-percent clean energy resources by 2050.
(b)
"Clean energy resource" means any electricity-generating technology that generates or stores electricity without emitting carbon dioxide into the atmosphere. Clean energy resources include, without limitation, eligible energy resources as defined in section
40-2-124 (1)(a)
.
(c)
(I)
"Qualifying retail utility" means a retail utility providing electric service to more than five hundred thousand customers in this state or any other electric utility that opts in pursuant to subsection (3)(b) of this section.
(II)
"Qualifying retail utility" does not include a municipally owned utility.
(3)
Clean energy targets.
(a)
In addition to the other requirements of this section, a qualifying retail utility shall meet the following clean energy targets:
(I)
By 2030, the qualifying retail utility shall reduce the carbon dioxide emissions associated with electricity sales to the qualifying retail utility's electricity customers by eighty percent from 2005 levels.
(II)
For the years 2050 and thereafter, or sooner if practicable, the qualifying retail utility shall seek to achieve the goal of providing its customers with energy generated from one-hundred-percent clean energy resources so long as doing so is technically and economically feasible, in the public interest, and consistent with the requirements of this section.
(III)
The qualifying retail utility shall retire renewable energy credits established under section
40-2-124 (1)(d)
, in the year generated, by any eligible energy resources used to comply with the requirements of this section.
(b)
Any other electric public utility may opt into the full terms of this entire section upon notification to the commission.
(4)
Submission and approval of plans.
(a)
The first electric resource plan that a qualifying retail utility files with the commission after January 1, 2020, must include a clean energy plan that will achieve the clean energy target set forth in subsection (3)(a)(I) of this section and make progress toward the one-hundred-percent clean energy goal set forth in subsection (3)(a)(II) of this section in accordance with the following:
(I)
The electric resource plan containing the clean energy plan must utilize a resource acquisition period that extends through 2030.
(II)
The clean energy plan submitted to the commission must set forth a plan of actions and investments by the qualifying retail utility projected to achieve compliance with the clean energy targets in subsections (3)(a)(I) and (3)(a)(II) of this section and that result in an affordable, reliable, and clean electric system.
(III)
In the electric resource plan that includes the clean energy plan, the qualifying retail utility shall clearly distinguish between the set of resources necessary to meet customer demands in the resource acquisition period and the additional clean energy plan activities that may be undertaken to meet the clean energy target in subsection (3)(a)(I) of this section, which may create an additional resource need for the clean energy plan. These activities may include retirement of existing generating facilities, changes in system operation, or any other necessary actions.
(IV)
After conducting any procurement process pursuant to subsection (5)(b) of this section or otherwise, the qualifying retail utility shall set forth the actions and investments required to fill the additional resource need identified for the clean energy plan to satisfy the clean energy target in subsection (3)(a)(I) of this section. These actions and investments may include development of new clean energy resources, development of new transmission and other supporting infrastructure, and clean energy resource acquisitions. Any new transmission development is subject to existing commission and stakeholder transmission planning processes, as applicable.
(V)
The clean energy plan must describe the effect of the actions and investments included in the clean energy plan on the safety, reliability, renewable energy integration, and resilience of electric service in the state of Colorado.
(VI)
The clean energy plan must set forth the projected cost of its implementation and anticipated reductions in carbon dioxide and other emissions.
(VII)
If the clean energy plan includes accelerated retirement of any existing generating facilities, the clean energy plan must include workforce transition and community assistance plans for utility workers impacted by any clean energy plan and a plan to pay community assistance to any local government or school district, the voters of which have approved projects the costs of which are expected to be paid for from property taxes that are directly impacted by the accelerated retirement of the electric generating facility in an amount equal to the costs of the voter-approved projects that were expected to be paid from the revenue sources directly impacted by the accelerated retirement of the projects, including but not limited to the payment of bonds, notes, or other multiple-fiscal year obligations or financed purchase of an asset or certificate of participation agreements that have been issued or entered into to pay the costs of such projects. Any payment of community assistance shall be reduced on an equivalent basis to the extent that property tax is derived from new electric infrastructure developed in the same impacted community. The qualifying retail utility may propose a cost-recovery mechanism to recover the prudently incurred costs of any workforce transition and community assistance plans, while giving due consideration to the impact on low-income customers. The qualifying retail utility will not earn its authorized rate of return on any noncapital costs incurred as part of any workforce transition plan. The workforce transition and community assistance plans must include, to the extent feasible, estimates of:
(A)
The number of workers employed by the utility or a contractor of the utility at the electric generating facility;
(B)
The total number of existing workers with jobs that will be retained and the total number of existing workers with jobs that will be eliminated due to the retirement of the electric generating facility;
(C)
With respect to the existing workers with jobs that will be eliminated due to the retirement of the electric generating facility, the total number and number by job classification of workers for whom: Employment will end without being offered other employment by the utility; the workers will retire as planned, be offered early retirement, or leave voluntarily; the workers will be retained by being transferred to other electric generating facilities or offered other employment by the utility; and the workers will be retrained to continue to work for the utility in a new job classification;
(D)
If the utility is replacing the electric generating facility being retired with a new electric generating facility: The number of workers from the retired electric generating facility that will be offered employment at the new electric generating facility and the number of jobs at the new electric generating facility that will be outsourced to subcontractors. The utility shall develop a training or apprenticeship program, under the terms of an applicable collective bargaining agreement, if any, for the maintenance and operation of any new combination generation and storage facility owned by the utility that does not emit carbon dioxide, to which facility displaced workers may transfer as appropriate.
(VIII)
If the minimum amounts of electricity from eligible energy resources set forth in section
40-2-124 (1)(c)
are satisfied, a qualifying retail utility may propose to use up to one-half of the funds collected annually under section
40-2-124 (1)(g)
, as well as any accrued funds, to recover the incremental cost of clean energy resources and their directly related interconnection facilities. The utility may account for these funds in calculating the cost of the plan.
(b)
The division of administration in the department of public health and environment shall participate in any proceeding seeking approval of a clean energy plan developed by a qualifying retail utility pursuant to this section. The division shall describe the methods of measuring carbon dioxide emissions and shall verify the projected carbon dioxide emission reductions as a result of the clean energy plan.
(c)
(I)
After consulting with the air quality control commission, the division of administration shall determine whether a clean energy plan as filed under this section will result in an eighty percent reduction, relative to 2005 levels, in carbon dioxide emissions from the qualifying retail utility's Colorado electricity sales by 2030 and is otherwise consistent with any greenhouse gas emission reduction goals established by the state of Colorado. The division shall publish, and shall report to the public utilities commission, the division's calculation of carbon dioxide emission reductions attributable to any approved clean energy plan. Nothing in the division's engagement in this process shall be construed to diminish or override the commission's authority under this title 40.
(II)
Notwithstanding anything in this section to the contrary, the division shall comply with section
25-7-105 (1)(e)
(VIII.2) in making any calculation or determination pursuant to subsection (4)(c)(I) of this section.
(d)
The commission shall approve the clean energy plan if the commission finds it to be in the public interest and consistent with the clean energy target in subsection (3)(a)(I) of this section, and the commission may modify the plan if the modification is necessary to ensure that the plan is in the public interest. In evaluating whether a clean energy plan submitted to the commission is in the public interest, the commission shall consider the following factors, among other relevant factors as defined by the commission:
(I)
Reductions in carbon dioxide and other emissions that will be achieved through the clean energy plan and the environmental and health benefits of those reductions;
(II)
The feasibility of the clean energy plan and the clean energy plan's impact on the reliability and resilience of the electric system. The commission shall not approve any plan that does not protect system reliability.
(III)
Whether the clean energy plan will result in a reasonable cost to customers, as evaluated on a net present value basis. In evaluating the cost impacts of the clean energy plan, the commission shall consider the effect on customers of the projected costs associated with the plan as set forth in subsection (4)(a)(VI) of this section as well as any projected savings associated with the plan, including projected avoided fuel costs.
(e)
If the commission finds that approval of the clean energy plan is not in the public interest, or if the commission modifies the plan, the utility may choose to submit an amended plan to the commission for approval in lieu of having no plan or implementing the modified plan. No clean energy plan is effective without commission approval.
(5)
Regulatory matters.
(a)
Ensuring retail rate stability.
(I)
The commission shall establish a maximum electric retail rate impact of one and one-half percent of the total electric bill annually for each customer for implementation of the approved additional clean energy plan activities, consistent with this subsection (5). Nothing in this subsection (5)(a) supersedes subsection (3)(a)(I) of this section.
(II)
A qualifying retail utility shall collect revenues for the additional clean energy plan activities through a clean energy plan revenue rider assessed on a percentage basis on all retail customer bills, as deemed prudent by the commission. The revenue rider may be established as early as the year following approval of a clean energy plan by the commission, and the qualifying retail utility may propose a commencement date and level no greater than the maximum electric retail rate impact. The revenue rider shall afford the qualifying retail utility cost-recovery treatment up to the maximum electric retail rate impact until the first rate case following the final implementation of the clean energy plan, at which time the remaining costs and savings associated with the clean energy plan will be incorporated into base rates. The qualifying retail utility may propose to adjust the level of the retail rate rider over time so long as it does not exceed the maximum retail rate impact and as deemed prudent by the commission. Nothing in this subsection (5) affects the commission's authority to evaluate the prudence of costs associated with approved clean energy plan activities.
(III)
The clean energy plan revenue rider will be utilized for costs of a qualifying retail utility's clean energy plan capital investments and operating and related expenses, exclusive of:
(A)
Fuel and transmission costs;
(B)
Costs associated with the capital investments and operating and related expenses within the overall approved resource portfolio necessary to fully satisfy the resource need identified for the electric resource plan without the clean energy plan;
(C)
The incremental costs of eligible energy resources recovered with funds collected under section
40-2-124 (1)(g)
; and
(D)
The incremental costs of any clean energy resources and their directly related interconnection facilities that, subject to commission approval, are recovered with funds collected under section
40-2-124 (1)(g)
in accordance with subsection (4)(a)(VIII) of this section. Savings associated with the plan will return to customers through existing rate riders and base rate adjustments.
(IV)
The clean energy plan revenue rider shall afford customers certainty on the maximum rate impact of the approved additional clean energy plan activities through at least calendar year 2030. Annually, the qualifying retail utility shall file a report with the commission indicating, at a minimum:
(A)
The amount of rider collections;
(B)
The revenue requirement associated with the approved additional clean energy plan activities to be paid for from the rider collections;
(C)
Any positive or negative rider account balance;
(D)
Interest expense associated with the revenue rider balance; and
(E)
Any other information required by the commission.
(V)
In the first rate case following the final implementation of the clean energy plan, the commission shall conduct a final reconciliation of the clean energy plan revenue rider and determine how to account for any positive or negative rider balance. In the manner determined by the commission, any remaining positive balance shall be returned to customers or used to reduce customer rates and any negative balance shall be incorporated into the qualifying retail utility's rates.
(b)
The qualifying retail utility shall utilize a competitive bidding process, as defined by the commission in rules, to procure any energy resources to fill the cumulative resource need derived from the electric resource plan and the clean energy plan in subsection (4)(a)(III) of this section. The commission shall allow the qualifying retail utility, inclusive of any ownership by its affiliates, to own a target of fifty percent of the energy and capacity associated with the clean energy resources and any other energy resources developed or acquired to meet the resource need, as well as all associated infrastructure, if the commission finds the cost of utility or affiliate ownership of the generation assets comes at a reasonable cost and rate impact. Utility ownership may come from utility or affiliate self-builds, build-transfers from independent power producers, or sales of existing assets from independent power producers or similar commercial arrangements. Nothing in this subsection (5)(b) alters the commission's authority under subsection (4)(d) of this section.
(c)
Any actions, including transmission development, taken by the qualifying retail utility shall be presumed prudent to the extent those actions are a part of an approved clean energy plan.
(d)
For the purposes of this section, the clean energy target evaluation will be based upon the qualifying retail utility's electricity sales within its electric service territory as it existed on January 1, 2019. In the event of a significant acquisition, the qualifying retail utility may file within one year after the acquisition an additional clean energy plan to address that acquisition, and the commission shall consider the additional clean energy plan consistent with the goals of this section.
(e)
The commission may, on its own motion or upon application by a qualifying retail utility, amend an approved clean energy plan if amendment is necessary to ensure the reliability and resilience of the electric system. The commission may require the qualifying retail utility to provide such periodic reports on the reliability and resiliency of the electric system as it may deem appropriate to ensure the clean energy plan does not adversely impact reliability or resiliency.
(f)
The commission shall consider affected communities within the filing qualifying retail utility's service territory with a tangible and pecuniary interest, and organizations representing those communities shall be presumed to have standing in a proceeding seeking approval of any clean energy plan filed pursuant to this section.
(g)
(I)
A clean energy plan voluntarily filed by a municipal utility or a cooperative electric association that has voted to exempt itself from regulation by the commission pursuant to article
9.5
of this title 40 shall be deemed approved by the commission as filed if:
(A)
The division of administration, in consultation with the commission, verifies that the plan demonstrates that, by 2030, the municipal utility or cooperative electric association will achieve at least an eighty-percent reduction in greenhouse gas emissions caused by the entity's Colorado electricity sales relative to 2005 levels; and
(B)
The clean energy plan has previously been approved by a vote of the entity's governing body.
(II)
Voluntary submission of a clean energy plan by a municipal utility or a cooperative electric association does not alter the entity's regulatory status with respect to the commission, including under article
9.5
of this title 40.
(h)
Nothing in this subsection (5) precludes the use of bonds as a mechanism for recovering utility capital in a retired electric generating facility.
(6)
Reports.
One year after approval of any electric resource plan that incorporates a clean energy plan, the qualifying retail utility shall prepare a report to the governor, the general assembly, the public utilities commission, and the air quality control commission outlining progress toward the clean energy targets set forth in this section. The report must set forth the clean energy resources developed under any clean energy plan, the cost and customer impact of those clean energy resources, the effect of any approved clean energy plan on system reliability, and any other relevant information. The report must also identify the need for new or additional technology development necessary to achieve the clean energy targets of this section.
(7)
Future electric resource plans.
Any electric resource plan submitted to the commission after approval of the clean energy plan must include an update on the progress made toward the approved clean energy plan, as well as actions and investments by the qualifying retail utility projected to achieve compliance with the emission reduction target identified in subsection (3)(a)(I) of this section and make progress toward the one-hundred-percent clean energy goal set forth in subsection (3)(a)(II) of this section. The commission may solicit input from the division of administration for assistance in evaluating the emission reductions associated with any future electric resource plan and consistent with the clean energy targets of this section. The commission shall review the qualifying retail utility's actions and investments in accordance with the standards set forth in subsection (4)(d) of this section.
Amended by 2023 Ch. 352,§ 3, eff. 6/5/2023.
Amended by 2021 Ch. 325, § 78, eff. 7/1/2021.
Added by 2019 Ch. 359, § 5, eff. 5/30/2019.
L. 2019: Entire section added, (SB 19-236), ch. 3291, p. 3291, § 5, effective May 30. L. 2021: IP(4)(a)(VII) amended, (HB 21-1316), ch. 2062, p. 2062, § 78, effective July 1.
Section 31 of chapter 359 (SB 19-236), Session Laws of Colorado 2019, provides that the act adding this section applies to conduct, including power purchase agreements entered into and utility rate-based property development, occurring on or after May 30, 2019.