Reduce Cost of Use of Natural Gas

The act requires the Colorado energy office to issue a request for information by December 1, 2024, to solicit interest from local governments that are served by a dual-fuel utility (utility) in becoming a gas planning pilot community (community). A gas planning pilot community is defined in the act as a local government in which constituents have gas service provided by a utility and an active franchise agreement with the utility, which local government formally indicates an interest in working with the utility to mutually explore opportunities for neighborhood-scale alternatives projects. A neighborhood-scale alternatives project geographically targets decommissioning a portion of the gas distribution system or avoids expanding the gas distribution system in order to serve new construction projects and provides alternative energy service to buildings within the project area that reduces future greenhouse gas emissions required to serve buildings.

By April 30, 2025, the Colorado energy office and a utility must jointly file with the public utilities commission (commission) the results of the request for information, identifying up to 5 proposed communities. In identifying proposed communities, the Colorado energy office and the utility must prioritize local governments that are interested in pursuing thermal energy network or geothermal energy projects as part of the proposed community's evaluation of potential neighborhood-scale alternatives projects. The Colorado energy office and the utility must also jointly file a draft agreement between the utility and a proposed community to identify and pursue a neighborhood-scale alternatives project. The commission must approve or modify the list of proposed communities by June 30, 2025.

By October 1, 2025, though a utility and local government may agree to extend this deadline, a utility and each approved community must enter into an agreement, and the utility must submit to the commission a list of the communities with which the utility has entered into an agreement. For each approved community, the utility is required to disclose certain data and information to the Colorado energy office, the commission, and the community to inform the evaluation of potential neighborhood-scale alternatives projects.

The act requires the utility to work with an approved community to rank neighborhood-scale alternatives projects and, before June 1, 2026, to submit at least one neighborhood-scale alternatives project to the commission for approval if the neighborhood-scale alternatives project has the full support of potentially affected customers. The filing must also contain a list of potential neighborhood-scale alternatives projects that are ranked highly but do not have full customer support at the time of the filing. Prior to June 1, 2027, a utility and a local government must jointly submit an application for commission approval of the neighborhood-scale alternatives projects included on this list, which projects may lack full customer support if the local government has determined that a reasonable majority of customers supports each project. The joint application must also include the net costs of the projects.

If a utility will not pursue a neighborhood-scale alternatives project in one or more communities, the utility and local government, prior to June 1, 2027, are required to jointly file a report with the commission explaining why a project will not be pursued in that community.

The commission must allow a utility to recover costs incurred from the implementation of a neighborhood-scale alternatives project. In approving a neighborhood-scale alternatives project, the commission may modify the gas utility's service requirement for select premises with an alternative energy service requirement. A utility may propose to fund conversion of existing gas appliances or equipment to nonemitting thermal resources and may also propose to offer new rate structures to pay for thermal energy networks or other nonemitting thermal resources as an alternative energy service.

By June 1 of each year following approval of a neighborhood-scale alternatives project, a utility is required to submit a report to the commission on the implementation of any approved neighborhood-scale alternatives projects. By July 1, 2028, or another time determined by the commission, the commission must hire a third-party consultant to conduct an analysis of all approved and proposed neighborhood-scale alternatives projects and present the findings of the analysis to the commission and the general assembly.

For the 2024-25 state fiscal year, the act appropriates:

• $43,650 to the office of the governor for use by the Colorado energy office from the general fund for program administration; and
• $29,678 to the commission from the public utilities commission fixed utility fund for personal services and operating expenses.

APPROVED by Governor May 22, 2024

EFFECTIVE August 7, 2024
(Note: This summary applies to this bill as enacted.)