Public Utilities Commission Modernize Gas Utility Demand-side Management Standards

The act updates the methods used to determine the cost-effectiveness of demand-side management (DSM) programs of public utilities selling natural gas at retail, including requiring that the calculation of future benefits reflects the avoided costs to ratepayers resulting from reduced consumption of natural gas. The act specifies that the calculation must be based on reliable estimates and published scientific data, including an increase in the social cost of carbon dioxide from $46 to $68 per short ton, and must include methane emissions using a social cost of methane of not less than $1,756 per short ton. In addition, the act adds savings targets and budget control mechanisms to the approval process for gas DSM programs, paralleling the existing process that applies to electric DSM programs. Section 5 of the act specifies labor standards that apply to all necessary plumbing, mechanical, and electrical work performed in connection with DSM projects for which a utility customer is eligible for a rebate from the utility. Under these standards, the utility may assign its own employees to do the work, but if a contractor is to be hired for a project in a commercial or industrial building or multifamily residential structure, the contractor must be chosen from a list of qualified contractors maintained by the Colorado department of labor and employment. To be eligible for inclusion on the list, a contractor must participate in specified apprenticeship programs. In addition, for smaller residential projects, the utility must condition customer rebates on the customer's use of licensed plumbing and electrical contractors.

(Note: This summary applies to this bill as enacted.)