C.R.S. § 40-2-135: Retail distributed generation - customers' rights - working group - accelerated interconnection - rules - penalties.

(1) A retail electric utility customer is entitled to generate, consume, store, and export electricity produced from eligible energy resources to the electric grid through the use of customer-sited retail distributed generation, as defined in section 40-2-124 (1)(a)(VIII), subject to reliability standards, interconnection rules, and procedures, as determined by the commission.

(2) (a) A retail electric utility violates this section if the utility fails to provide reasonable, good faith, and timely service to an interconnection customer, and such violation may result in commission action, including the assessment of monetary fines against the retail electric utility. If a retail electric utility fails to provide timely service and adhere to timelines that the commission establishes as part of the commission's interconnection rules, the retail electric utility may be subject to penalties of up to two thousand dollars per day for each day that the violation occurred.

(b) The commission shall adopt rules to annually adjust the penalty amount set forth in subsection (2)(a) of this section based on the annual percentage change in the United States department of labor's bureau of labor statistics consumer price index for the Denver-Aurora-Lakewood area for all items paid by all urban consumers, or its successor index.

(c) (I) For a retail distributed generation resource that is twenty-five kilowatts or less, a public utility shall provide an interconnection customer an executed interconnection agreement no more than thirty business days after receiving payment of an interconnection fee from the interconnection customer.

(II) Following the construction of a retail distributed generation resource, a public utility must provide interconnection of the customer's retail distributed generation resource no more than thirty business days after the interconnection customer submits to the public utility a certificate of completion.

(III) If the sum of a public utility's compliance with the times set forth in this subsection (2)(c) exceeds sixty days, the public utility may be subject to penalties consistent with this subsection (2).

(d) A public utility is not subject to penalties under this subsection (2) if the public utility can demonstrate that:

(I) The interconnection customer failed to timely remedy any material defects in the completion of the interconnection customer's application for interconnection and the public utility identified the defects during its review of the application;

(II) The retail distributed generation resource cannot be safely interconnected to the public utility's system in a manner consistent with the commission's interconnection rules; or

(III) Other extenuating circumstances caused a delay in interconnection.

(3) (a) An interconnection customer may file a complaint with the commission in accordance with section 40-6-108 alleging that a public utility has violated subsection (2) of this section.

(b) In considering a complaint filed pursuant to this subsection (3), the commission may order the public utility to refund interconnection study fees charged to the interconnection customer. If a public utility is ordered to refund such interconnection study fees, such refund is not an expense that the public utility may recover from its ratepayers.

(4) The commission shall only assess the penalties set forth in subsection (2)(a) of this section against a public utility if:

(a) An interconnection customer or commission staff has filed, and the commission has adjudicated, a complaint pursuant to section 40-6-108; and

(b) The public utility has a tariff on file with the commission that provides incentives and penalties to provide interconnection service and the public utility has exceeded the timelines established in the tariff filing.

(5) In jurisdictions that allow interconnection without a public utility present, an interconnection customer may install all necessary metering equipment and energize the system following installation if:

(a) The interconnection customer has an interconnection agreement with a public utility and a certificate of completion from a local government's building code enforcement authority; and

(b) The installation and energizing work is overseen by a licensed master electrician.

(6) (a) A public utility may recover its prudently incurred costs to facilitate a timely interconnection, which costs may include the cost of equipment that the public utility procures for future upgrades needed to interconnect retail distributed generation resources. A public utility may recover the costs of any such equipment inventory as capital work in progress if the inventory is projected to be used within five years after its procurement and with a return at the most recently authorized weighted average cost of capital.

(b) A public utility shall not require an interconnection customer to pay the costs associated with reasonable and necessary interconnection facilities and upgrades until thirty days before the public utility incurs the costs. A public utility may require an interconnection customer to provide security for the estimated full costs of interconnection at the time both parties execute an interconnection agreement. A public utility shall provide security options to the interconnection customer, including acceptance of a letter of credit from a qualified provider.

(7) (a) On or before August 15, 2026, a public utility with more than five hundred thousand customers in the state shall convene a working group to accelerate distributed generation interconnection. The working group must include stakeholders from the public utility, staff of the commission, the office of the utility consumer advocate created in section 40-6.5-102, trade associations, and project developers.

(b) The working group shall:

(I) Discuss, if applicable:

(A) A cluster and batch study process for interconnection studies designed to accelerate interconnection for all projects in the public utility's interconnection queue; and

(B) A process for the public utility to accept a surety bond in lieu of a letter of credit or cash for interconnection upgrade work; and

(II) Discuss, and the public utility shall implement, a process for third-party interconnection studies and upgrades, which process must include a list of third-party contractors that are approved by the public utility and a process for contractors to be added and removed from the list as applicable.

(c) If an interconnection customer elects to use a third-party contractor to perform interconnection studies or upgrade work consistent with the public utility's internal processes:

(I) The interconnection customer shall use a contractor that is approved by the public utility pursuant to subsection (7)(b)(II) of this section;

(II) The public utility is not liable for and shall not warranty designs, construction, or work performed by the third-party contractor that results in damages, injury, or death;

(III) Any reliability impacts from third-party contractor designs, construction, or other upgrade work are included and specifically designated in reliability metric measurements required by the commission;

(IV) The third-party contractor shall submit any designs or as-built drawings to the public utility within three business days after completion to allow the public utility to maintain accurate geographic information system mapping;

(V) The third-party contractor shall provide all interconnection studies and other design work to the public utility, and the public utility may review and request modifications, including requesting additional analysis to ensure accuracy and completion;

(VI) The public utility shall inspect any construction work performed by the third-party contractor. The third-party contractor shall obtain the public utility's confirmation that the work is complete prior to deeming any construction work final and completed. Inspections are at the expense of the third-party contractor. The third-party contractor shall perform any additional work required to address safety or reliability concerns at the third-party contractor's expense.

(VII) Neither the public utility nor ratepayers are responsible for costs associated with repairs or corrections to third-party work. Costs associated with repairs or corrections to third-party work are the responsibility of the third-party contractor.

(d) On or before December 15, 2026, the public utility shall file a notice with the commission that includes a report on any recommendations of the working group and indicate which, if any, recommendations are unanimously approved by the working group. The report must also indicate which recommendations require or may require commission approval. The public utility shall make appropriate filings to implement any recommendations that require commission approval on or before January 1, 2027.

(8) All interconnection upgrades and related utility construction work performed by a third-party contractor must meet applicable safety, reliability, labor, and technical standards, including the applicable labor requirements set forth in section 40-2-132.5 (5).