Access to Distributed Generation

On or after January 1, 2026, but before February 1, 2026, an investor-owned electric utility (utility) with more than 500,000 customers must make at least 50 megawatts of inclusive community solar capacity available, and a utility with 500,000 or fewer customers must make at least 4 megawatts of inclusive community solar available.

Before February 1, 2027, a utility with more than 500,000 customers must make an additional 50 megawatts of inclusive community solar capacity available, plus any unclaimed capacity left over from the previous allocation cycle, and a utility with 500,000 or fewer customers must make an additional 4 megawatts of inclusive community solar available.

Under current law, a utility customer may subscribe to a portion of a community solar facility. The customer then receives a bill credit on the customer's monthly utility bill in an amount proportional to the customer's share of the community solar facility output. Current law establishes limits on the amount of output from community solar facilities that a utility may purchase.

The bill requires a utility to acquire the entire output of a community solar facility that is allocated capacity on or after January 1, 2026, (new facility) and apply community solar bill credits to that new facility's subscribers. The bill requires a new facility to:

• Not exceed 5 megawatts of capacity, measured in alternating current;
• Interconnect with a utility's distribution system;
• Comply with applicable requirements of the "Colorado Energy Sector Public Works Project Craft Labor Requirements Act";
• Reserve at least 51% of its capacity for income-qualified subscribers;
• Not allocate more than 40% of the new facility's capacity to a single subscriber; and
• Supply to a subscriber of the new facility no more than 120% of the expected average annual total consumption of electricity by the subscriber.

The bill affords certain protections for subscribers of new facilities. Subscriber organizations and subscription coordinators are prohibited from:

• Using credit scores, customer scores, or any utility deposit to deny prospective residential subscribers;
• Charging a sign-up or termination fee to residential subscribers;
• Engaging in misleading conduct or making false representations toward prospective subscribers; and
• Preventing a subscriber from transferring a subscription within the utility's service territory if the subscriber moves residences.

A subscriber organization shall provide an income-qualified subscriber of a new facility with a subscription discount of at least:

• 25% of the value of the community solar bill credit;
• 30% of the value of the community solar bill credit if the new facility receives federal tax credits from the federal "Inflation Reduction Act of 2022" for the specific purpose of being located in an energy community; and
• 50% of the value of the community solar bill credit if the new facility receives federal tax credits from the federal "Inflation Reduction Act of 2022" specifically for providing income-qualified households with utility bill assistance.

The commission must also adopt a standardized form that contains relevant information and disclosures that subscriber organizations and subscription coordinators must provide to prospective subscribers.

The bill also directs the commission to establish:

• Cost-sharing mechanisms for new facilities that are connecting to the utility's distribution system, in which the new facility is required to pay only for its proportional share of system upgrades; and
• Reporting requirements for a utility regarding cost-sharing mechanisms and the cost-effectiveness of the utility's interconnection of new facilities when submitting a distribution system plan.

The commission may approve, conditionally approve, modify, or reject any distribution system plans proposed by a utility based on the utility's plans for interconnecting new facilities.

The bill authorizes the commission to approve cost recovery for energy purchased from a community solar facility by an investor-owned electric utility.

The bill also requires a utility with more than 500,000 customers to acquire 50 megawatts of distributed generation paired with energy storage by June 1, 2026, and an additional 50 megawatts of distributed generation paired with energy storage between January 1, 2027, and June 1, 2027.

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