C.R.S. § 40-2-123: Energy technologies - consideration by commission - incentives - demonstration projects - commission may require specific customer-facing programs - legislative declaration - definitions.

(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 money.

(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(2) Repealed.

(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.

(6) (a) The general assembly finds and declares that:

(I) Since 2007, Colorado has enacted several statutes that direct commission-regulated investor-owned utilities to implement customer-facing programs aimed at reducing energy bills, reducing energy consumption, or supporting the transition to lower- or zero-carbon-emitting technologies;

(II) Such customer-facing programs include demand-side management, beneficial electrification, clean heat plans, and transportation electrification;

(III) For many of these programs, utilities may lack a natural incentive to take certain actions or implement these programs effectively. Additionally, due to staffing or economies of scale, smaller utilities may lack the ability to operate such programs at a reasonable cost to ratepayers.

(IV) Established state enterprises, such as the building decarbonization enterprise created in section 24-38.5-125, may provide an alternative option for administering competitive solicitations for third-party program administration; and

(V) Therefore, the commission should be authorized to require commission-regulated investor-owned utilities to engage one or more third parties to administer specific customer-facing programs if the commission deems the use of one or more third parties prudent and in the best interest of ratepayers. In addition, the commission should be authorized to require the use of a competitive bidding process to procure the services of a third-party administrator.

(b) In an adjudicatory proceeding, the commission may require a commission-regulated investor-owned utility to engage one or more third parties to administer specific customer-facing programs if the commission deems the use of one or more third parties prudent and in the best interest of ratepayers. The commission may require a competitive bidding process to procure the services of a third-party administrator.

(c) As used in this subsection (6), "customer-facing program" means a program aimed at reducing energy bills, reducing energy consumption, or supporting the transition to lower- or zero-carbon-emitting technologies.

(7) (a) A commission-regulated investor-owned utility may enter into a third-party agreement to facilitate customer-facing programs, subject to commission approval. The commission may direct a commission-regulated investor-owned utility to propose to the commission the use of third-party administration for customer-facing programs.

(b) In a commission-regulated investor-owned utility's proposal to utilize third-party administration of a customer-facing program, the utility shall explain to the commission how the utility considered the following in relation to the customer-facing program:

(I) The potential for program success based on an assessment of similar administration structures that other utilities use for similar customer-facing programs;

(II) The administrative cost ratio of administering rebates versus the incentives paid out as part of the program;

(III) The time required to fulfill customer rebate requests; and

(IV) Prior program performance under a utility-led model.

(c) In an application to the commission to enter into a third-party agreement to facilitate customer-facing programs, the utility may not:

(I) Force a layoff of, or unilaterally change the terms of employment for, the utility employees who, in whole or in part, perform the administrative or service functions for the specific program, subject to a third-party agreement, and who are covered by a collective bargaining agreement unless the utility and the labor union representing the employees come to an agreement to reassign the employees to other positions within the utility at comparable pay and benefits as per the terms of the collective bargaining agreement and any related company policies; and

(II) Propose to enter into any third-party administrator agreements that cancel or modify agreements with construction or utility construction contractors who are under a current contract to perform work directly for the utility on a demand-side management, beneficial electrification, clean heat, or transportation electrification customer-facing program. The contracts shall remain in force even if a third-party administrator is contracted to administer the customer-facing program. Future considerations as to whether to extend or renew the construction or utility construction contractors' agreements can remain with the utility, and the utility can remain the client of record for the construction or utility construction contractors. Programs that direct a residential utility customer to engage a contractor directly are exempt from this subsection (7)(c)(II).

(d) Subject to commission approval based on a demonstration of the factors set forth in subsection (7)(b) of this section, a commission-regulated investor-owned utility shall utilize third-party administration for any customer-facing program.

(e) A third-party administrator of a customer-facing program is directly responsible for compliance with, and shall adhere to applicable labor standards for, construction- or utility-construction-specific work that would otherwise be applicable to the utility under Colorado law.