C.R.S. § 29-1-208: Local government thermal energy aggregation - contracting authority - revenue bonds - private operators - definitions.

(1) As used in this section, unless the context otherwise requires:

(a) "Local government" means a statutory or home rule city, town, county, city and county, or special district.

(b) "Public utilities commission" means the public utilities commission created in section 40-2-101.

(c) "Thermal energy" has the meaning set forth in section 40-3.2-108 (2)(r).

(d) "Thermal energy network" has the meaning set forth in section 40-3.2-108 (2)(s).

(e) "Thermal energy service agreement" means a contract between a local government and one or more other parties for the purchase, sale, delivery, or capacity reservation of thermal energy or thermal energy network service.

(2) (a) A local government may aggregate thermal energy demand for buildings and facilities owned or managed by the local government with demand from other entities, including private entities that elect to participate in the thermal energy network.

(b) A local government that aggregates thermal energy demand pursuant to this subsection (2) is not considered a public utility or a municipal utility and is not subject to regulation by the public utilities commission.

(3) (a) A local government may enter into thermal energy service agreements for a term not to exceed twenty-five years, subject to annual appropriation by the local government.

(b) A local government may enter into intergovernmental agreements with other local governments pursuant to section 29-1-203 for the development, operation, or financing of a thermal energy network.

(c) A local government may enter into a contract with a private entity for the design, construction, operation, maintenance, or management of a thermal energy network on behalf of the local government if the contract is approved by the governing body of the local government.

(4) A local government or a private entity on behalf of a local government, other than a private entity that is a utility regulated by the public utilities commission or an affiliate of a public utility, as defined in section 40-3-104.3 (4)(b), that operates, maintains, or manages a thermal energy network is not considered a municipal utility or a public utility, as defined in section 40-1-103, and is not subject to regulation by the public utilities commission.

(5) (a) (I) If a local government is otherwise authorized by law to issue bonds, the local government may issue revenue bonds, general obligation bonds, or other financing mechanisms authorized by law for the purpose of financing the design, construction, acquisition, or improvement of thermal energy network infrastructure, including pipes, interconnections, heat exchangers, ground-source loops, customer connections, and other infrastructure related to the distribution of thermal energy.

(II) Nothing in this section shall be construed as impacting the statutory requirements related to the local government acquisition of electrical distribution infrastructure.

(b) If a local government issues bonds pursuant to this subsection (5), the bonds must be payable solely from the revenue derived from the operation of the thermal energy network and do not constitute a general obligation of the local government.

(c) General obligation bonds issued pursuant to this subsection (5) are subject to section 20 of article X of the state constitution and all other applicable laws.

(d) Notwithstanding any other provision of this section, nothing in this subsection (5) shall be construed to limit, restrict, or otherwise impair the bonding, financing, or credit-raising authority, or any powers incidental to that authority, granted to a local government by its organic statute or any other provision of state law.

(6) A local government may provide thermal energy service to participants located outside the jurisdictional boundaries of the local government if:

(a) The local government has entered into an intergovernmental agreement in accordance with section 29-1-203 with the local government in which the participant receiving the thermal energy service is located; or

(b) The local government and the participant have entered into a thermal energy service agreement.

(7) The provision of thermal energy service in accordance with this section shall not be construed as the provision of natural gas service and does not constitute a violation of any exclusive franchise agreement for the distribution of natural gas.

(8) A thermal energy service agreement entered into pursuant to this section may be submitted as evidence of customer demand in any proceeding before the public utilities commission conducted pursuant to section 40-4-121.

(9) Nothing in this section expands or limits the authority of the public utilities commission over a public utility regulated under title 40. Except as expressly provided in this section, thermal energy systems authorized pursuant to this section are not regulated by the public utilities commission and are governed by local government contracting authority.

(10) (a) A public electric utility that has a certificate of public convenience and necessity issued by the public utilities commission to provide retail electric service in the territory where a thermal energy network facility is located has the exclusive right to provide electric service to the thermal energy network facility; except that this subsection (10) does not impact a customer's right to utilize retail distributed generation, as defined in section 40-2-124 (1)(a)(VIII).

(b) Nothing in this section shall be construed as impacting the statutory requirements related to a public electric utility obtaining a certificate of public convenience and necessity issued by the public utilities commission.

(11) (a) Emission reductions associated with a thermal energy network that is operating in accordance with this section and that is within the service territory of a public utility that is required to file a clean heat plan with the public utilities commission pursuant to section 40-3.2-108 shall be counted as part of the public utility's emission reduction calculations related to the utility's clean heat plan, even if the thermal energy network is constructed or operated without utility investment or participation.

(b) The public utilities commission shall prohibit the double counting of emission reductions associated with a thermal energy network.

(c) A local government that constructs, develops, or operates a thermal energy network shall notify the public utility that provides utility service to the location where the thermal energy network is located that the local government will construct, develop, or operate a thermal energy network prior to beginning construction of the thermal energy network in order to allow for coordination between the local government and the public utility related to the utility's clean heat plan, to the extent practicable.