Colo. Rev. Stat. § 40-2-123

Current through 11/5/2024 election

Section 40-2-123 - Energy technologies - consideration by commission - incentives - demonstration projects - definitions - repeal

(1)

(a) The commission shall give the fullest possible consideration to the cost-effective implementation of new clean energy and energy-efficient technologies in its consideration of generation acquisitions for electric utilities, bearing in mind the beneficial contributions such technologies make to Colorado's energy security, economic prosperity, insulation from fuel price increases, and environmental protection, including risk mitigation in areas of high wildfire risk as designated by the state forest service. The commission shall consider utility investments in energy efficiency to be an acceptable use of ratepayer moneys.

(b)

(I) The commission may give consideration to the likelihood of new environmental regulation and the risk of higher future costs associated with the emission of greenhouse gases such as carbon dioxide and methane when it considers utility proposals to acquire resources or to implement DSM programs. The commission shall collaborate with the air quality control commission to ensure that any emissions reductions achieved through gas DSM programs are appropriately accounted for in meeting the state's greenhouse gas reduction goals.

(II) For purposes of evaluating a gas DSM program or measure that incorporates innovative technologies with the potential for significant impact, such as energy-saving technologies that go beyond what is achievable using energy efficiency measures alone, the commission may find the program or measure cost-effective, notwithstanding section 40-1-102(5)(a), even if its initial benefit-cost ratio is not greater than one when calculated using currently available data and assumptions.

(c) The commission shall give the fullest possible consideration to proposals under the reenergize Colorado program, created in section 24-33-115, C.R.S., with particular attention to those projects offering the prospect of job creation and local economic growth.

(d) In its consideration of generation acquisitions for electric utilities, the commission shall consider the economic opportunities that may be provided through workforce transition and community assistance plans, as well as whether the acquisitions will create benefits for low-income customers and disproportionately impacted communities.

(2)

(a) The commission shall consider proposals by Colorado investor-owned utilities for the following types of projects:

(I) To construct, own, and operate electric generation or storage facilities utilizing innovative energy technology; or

(II) To partner with other energy developers or independent power producers to construct, acquire, or contract for electric generation or storage facilities utilizing innovative energy technology.

(b)

(I) An investor-owned utility may apply under this subsection (2) to the commission for approval of innovative energy technology projects in areas of the state that have been economically affected by the accelerated retirements of existing generation resources. Any such projects are eligible for cost recovery through the clean energy plan revenue rider, and, if approved by the commission, prudently incurred costs that do not constitute clean energy plan activities are eligible for recovery through an adjustment clause or other similar cost-recovery mechanism other than the clean energy plan revenue rider, in accordance with the retail rate stability provisions of section 40-2-125.5(5), following the project's commencement of commercial operation and until any project is placed in base rates. Nothing in this section prohibits or deters cost-effective innovative energy technology deployment; except that, if an innovative energy technology project is abandoned or cancelled, in whole or in part, the utility is not entitled to recover any costs of research, planning, development, construction, start-up, or operation in connection with the project absent a finding by the commission that such costs were prudently incurred, and in any cost-recovery proceeding the utility shall bear the burden of proof.

(II) An investor-owned utility shall present any innovative energy technology projects as part of its electric resource planning process so that the projects can be evaluated as part of a comprehensive plan to meet the investor-owned utility's energy and capacity needs. The presentation for each project must address:

(A) How the project will be developed;

(B) Whether the project involves a change to an existing generation resource to meet the requirements as an innovative energy technology project or whether the project is a newly developed innovative energy technology project;

(C) How the project mitigates the impacts of the transition to cleaner generation technologies in affected areas of Colorado; and

(D) As applicable, how the project furthers the efforts of any workforce transition plan or community assistance plan developed pursuant to section 40-2-125.5(4)(a)(VII) or 40-2-133 associated with any accelerated retirement of an electric generating facility and how the project complies with section 40-2-129.

(III)

(A) Any innovative energy technology projects approved pursuant to this subsection (2) proportionally count toward the targets in section 40-2-125.5(5)(b); except that innovative energy technology projects developed by an investor-owned utility pursuant to this subsection (2) must not exceed, in the aggregate, a nameplate capacity of three hundred megawatts.

(B) Notwithstanding any other provision of law, the commission shall not permit an investor-owned utility to earn a total return from an innovative energy technology project that exceeds the total return the utility would have earned from a photovoltaic solar generation facility or wind generation facility of equivalent capacity.

(c) To facilitate financing of an innovative energy technology project, one or more investor-owned utilities may develop, construct, or own a project through a special-purpose entity or other affiliated partnership or corporation, including a public-private partnership or partnership formed with other energy developers or independent power producers. For this purpose, an investor-owned utility is entitled to structure the partnership in the manner that it deems appropriate; to negotiate ownership interests in the project; and to use appropriate means to solicit potential partnerships, including requests for information, requests for proposals, or bilateral negotiations.

(d)

(I) In the construction or expansion of an innovative energy technology project approved pursuant to this subsection (2), an investor-owned utility shall use its own employees or qualified contractors, or both, but shall not use a contractor unless the contractor's employees have access to an apprenticeship program registered with the United States department of labor's office of apprenticeship or by a state apprenticeship agency recognized by that office; except that this apprenticeship requirement does not apply to:

(A) The design, planning, or engineering of the transmission facilities;

(B) Management functions to operate the transmission facilities; or

(C) Any work included in a warranty.

(II) The commission shall not approve any construction or expansion under this subsection (2) until the commission has completed the rule-making initiated before December 31, 2020, addressing in part section 40-2-129.

(e) As used in this subsection (2):

(I) "Innovative energy technology" means a generation technology or storage technology that, alone or in combination with other technologies used in a project:

(A) Generates or stores electricity without emitting greenhouse gas emissions into the atmosphere;

(B) At the time of any application under this subsection (2), has not been widely deployed in the United States. In evaluating whether a technology is "widely deployed" within the meaning of this subsection (2)(e)(I)(B), the commission may evaluate the number of commercial projects in which the technology is installed in the United States for purposes of electric generation and how long those projects have been in commercial operation.

(C) Does not include stand-alone wind, solar, or lithium-ion battery storage resources or wind or solar resources paired with lithium-ion battery storage.

(II) "Innovative energy technology project" or "project" means an electric generation or energy storage facility that demonstrates the use of innovative energy technology in Colorado and for which the investment in the innovative energy technology portion of the project constitutes the majority of the total project investment.

(f) This subsection (2) is repealed, effective December 31, 2024.

(3)

(a)

(I) Energy is critically important to Colorado's welfare and development and its use has a profound impact on the economy and environment. In order to diversify Colorado's energy resources, attract new businesses and jobs, promote development of rural economies, minimize water use for electric generation, reduce the impact of volatile fuel prices, and improve the natural environment of the state, the general assembly finds it in the best interests of the citizens of Colorado to develop and utilize solar energy resources in increasing amounts.

(II) For purposes of this subsection (3), "utility-scale" means projects with nameplate ratings in excess of two megawatts.

(b) The commission may consider whether acquisition of utility-scale solar resources is in the public interest, taking into account the associated costs and benefits, and, if so, the appropriate amount of utility-scale solar resources that should be acquired. In making this determination, the commission may consider the following potential attributes of utility-scale solar electric generation:

(I) Whether the proposed generation could provide energy storage to match the times during which utility generation is generally higher cost;

(II) Whether the proposed generation, due to modularity, scalability, and rapid deployment, could result in reduction of performance and financial risk for the utility;

(III) Whether utility-scale solar electric generation could reduce the consumption of water for electric generation;

(IV) Whether future costs can be stabilized through mitigation of the impact of unpredictable fossil fuel prices; and

(V) Whether carbon-free generation reduces long-term costs and risks related to potential carbon regulation or taxation.

(3.2) In its consideration of generation acquisitions for electric utilities, the commission may give the fullest possible consideration, at a utility's request, to the cost-effective implementation of new energy technologies for the generation of electricity from:

(a) Geothermal energy;

(b) The combustion of biomass, biosolids derived from the treatment of wastewater, and municipal solid waste. For purposes of this paragraph (b), "biomass" has the meaning established in section 40-2-124(1)(a), as clarified by the commission.

(c) Hydroelectricity and pumped hydroelectricity, taking into account the associated costs and benefits. For purposes of this paragraph (c):

(I) "Hydroelectricity" means the generation and delivery to the interconnection meter of any source of electrical or mechanical energy by harnessing the kinetic energy of water that is:

(A) A new facility that is an addition to water infrastructure such as a reservoir, ditch, or pipeline that existed before January 1, 2011, and does not result in any change in the quantity or timing of diversions or releases for purposes of peak power generation; or

(B) A new facility that is placed into production as part of new water infrastructure such as a reservoir, ditch, or pipeline constructed on or after January 1, 2011, and operated for primary beneficial uses of water other than solely for production of electricity.

(II) "Pumped hydroelectricity" means electricity that is generated during periods of high electrical demand from water that has been pumped during periods of low electrical demand from a lower-elevation reservoir to a higher-elevation reservoir taking into account the potential benefits or impacts of the proposed facility on fishery health.

(3.3) In its consideration of generation acquisitions for electric utilities, the commission may give the fullest possible consideration to the cost-effective implementation of new energy technologies for the generation of electricity from methane produced biogenically in geologic strata as a result of human intervention.

(3.5) Repealed.

(4) This section does not expand or contract the commission's jurisdiction over cooperative electric associations under this title.

(5) Any project approved pursuant to this section that is an energy sector public works project, as defined in section 24-92-303 (5), must comply with the applicable requirements of the "Colorado Energy Sector Public Works Project Craft Labor Requirements Act", part 3 of article 92 of title 24.

C.R.S. § 40-2-123

Amended by 2023 Ch. 247,§ 4, eff. 1/1/2024, app. only to any energy sector public works project for which a public utility or cooperative electric association invitation for bids or proposals is issued on or after 1/1/2024.

Amended by 2023 Ch. 37, § 31, eff. 3/23/2023.

Amended by 2021 Ch. 441, § 2, eff. 9/7/2021.

Amended by 2021 Ch. 330, § 3, eff. 9/7/2021.

Amended by 2021 Ch. 220, § 5, eff. 6/10/2021.

Amended by 2019 Ch. 359, § 3, eff. 5/30/2019.

Amended by 2017 Ch. 264, § 110, eff. 5/25/2017.

Amended by 2013 Ch. 406, § 6, eff. 6/5/2013.

L. 2001: Entire section added, p. 1524, § 4, effective August 8. L. 2006: Entire section amended, p. 1413, § 2, effective June 1. L. 2008: (2)(j) amended, p. 75, § 16, effective March 18; (1) amended and (3) and (4) added, p. 1686, § 1, effective June 2. L. 2009: (3.5) added, (SB 09-297), ch. 1297, p. 1297, § 3, effective May 20. L. 2010: (1)(c) added, (HB 10-1349), ch. 1816, p. 1816, § 4, effective June 8; (3.2) added, (SB 10-174), ch. 815, p. 815, § 11, effective August 11; (3.2) added, (SB 10-177), ch. 1864, p. 1864, § 6, effective August 11; (3.3) added, ch. 389, p. 1825, § 1, effective August 11. L. 2011: (3.2)(c) added, (HB 11 -1083), ch. 179, p. 179, § 1, effective August 10. L. 2012: (2)(j) amended, (HB 12-1315), ch. 980, p. 980, § 48, effective July 1. L. 2013: (1)(a) amended, (SB 13-273), ch. 2375, p. 2375, § 6, effective June 5. L. 2017: (2)(k) repealed, (SB 17-294), ch. 1415, p. 1415, § 110, effective May 25. L. 2019: (2) repealed, (SB 19-236), ch. 3291, p. 3291, § 3, effective May 30. L. 2021: (1)(d) added, (SB 21-272), ch. 1159, p. 1159, § 5, effective June 10; (1)(b) amended, (HB 21-1238), ch. 2132, p. 2132, § 3, effective September 7; (2) RC&RE, (HB 21-1324), ch. 2918, p. 2918, § 2, effective September 7.

(1) Amendments to subsection (3.2) by Senate Bill 10-174 and Senate Bill 10-177 were harmonized.

(2) Subsection (3.5)(e) provided for the repeal of subsection (3.5), effective July 1, 2013. (See L. 2009, p. 1297.)

(3) Section 14 of chapter 220 (SB 21-272), Session Laws of Colorado 2021, provides that the act changing this section applies to conduct occurring on or after June 10, 2021.

(4) Section 8 of chapter 330 (HB 21-1238), Session Laws of Colorado 2021, provides that the act changing this section applies to plans, applications, or other documents reviewed by the public utilities commission on or after September 7, 2021.

(5) Section 3 of chapter 441 (HB 21-1324), Session Laws of Colorado 2021, provides that the act changing this section applies to conduct occurring on or after September 7, 2021.

2023 Ch. 247, was passed without a safety clause. See Colo. Const. art. V, § 1(3).

2021 Ch. 441, was passed without a safety clause. See Colo. Const. art. V, § 1(3).

2021 Ch. 330, was passed without a safety clause. See Colo. Const. art. V, § 1(3).

For the legislative declaration contained in the 2006 act amending this section, see section 1 of chapter 300, Session Laws of Colorado 2006. For the legislative declaration in HB 21-1238, see section 1 of chapter 330, Session Laws of Colorado 2021. For the legislative declaration in HB 21-1324, see section 1 of chapter 441, Session Laws of Colorado 2021.