Utility Regulation

Section 1 of the bill requires the public utilities commission (commission), if relying on a discount rate when calculating the net present value of future carbon-based fuel costs as part of a utility's electric resource plan, to apply a discount rate that does not exceed the long-term rate of inflation.Section 2 requires the commission to establish mechanisms, guidelines, or rules to limit the amount of rate case expenses that an investor-owned electric or gas utility may recover from the utility's customers. In reviewing an investor-owned utility's application to modify base rates, the commission is required to certify that sufficient information is included in the application, including a comprehensive cost and revenue requirement analysis.Section 3 prohibits an investor-owned electric or gas utility from recovering various costs from its customers, including:

• More than 50% of annual total compensation or of expense reimbursement for a utility's board of directors;
• Tax penalties or fines issued against the utility;
• Certain advertising and public relations expenses;
• Lobbying and other expenses intended to influence the outcome of local, state, or federal legislation or ballot measures;
• Certain organizational and membership dues;
• Travel, lodging, food, or beverage expenses for the utility's board of directors and officers; and
• Gift or entertainment expenses.

If an investor-owned utility recovers prohibited costs, the commission is required to may assess a nonrecoverable penalty against the utility in an amount that is not less than the total amount improperly recovered and is required to order the utility to refund the amount improperly recovered to its customers, plus interest.An investor-owned utility is required to file an annual report with the commission on the utility's compliance with the prohibited cost recovery, which report must include the purpose, payee, and amount of any expenses associated with costs and activities not permitted to be recovered from customers.Section 4 requires that, on or before November 1, 2023, an investor-owned gas utility file with the commission for the commission's approval, amendment, or denial a gas price risk management plan that includes proposals for addressing the volatility of fuel costs recovered from the utility's ratepayers pursuant to the utility's gas cost adjustment filings .Section 4 requires the commission to adopt rules, on or before January 1, 2025, to :

• help protect investor-owned electric or gas utility customers from the volatility of gas prices by establishing a mechanism mechanisms that aligns align an investor-owned utility's financial incentives with the financial interests of its customers regarding incurred fuel costs . and
• Establish a mechanism In adopting the rules, the commission is required to consider mechanisms to create a financial incentive for an investor-owned utility to improve its electricity production cost efficiency while minimizing its fuel costs.

As part of its rules, the commission may also consider requiring each investor-owned electric utility to bear a percentage of its total fuel costs in order to incentivize the utility to find efficiencies and reduce fuel waste utility's financial health and corresponding impacts on customer affordability .Section 4 also requires the commission to open a proceeding to investigate the extent to which residential and other development in certain geographic areas drive natural gas infrastructure costs for any natural gas utility that serves more than 500,000 customers in the state. After completing the investigation, the commission shall consider whether a natural gas utility that serves more than 500,000 customers should be required to utilize alternative cost-recovery mechanisms or actions .Section 5 requires:

• On or before December 31, 2023, each regulated gas utility to remove from the utility's rate tariffs any incentives offered to an applicant applying for natural gas service to establish gas service to a property;
• The Colorado energy office to contract with an independent third party, on or before July 1, 2024, to evaluate the risk that stranded or underutilized natural gas infrastructure investments pose, including the risk posed to utility employees and contractors, and the annual projected rate impact that such stranded assets have on ratepayers;
• The commission to determine whether any changes to rules or depreciation schedules are warranted based on its review of the evaluation contracted by the Colorado energy office;
• An investor-owned gas utility to provide the commission information, including a map, about the utility's gas distribution system pipes;
• An investor-owned gas utility to refrain from penalizing or charging a fee to a customer that voluntarily terminates gas service. The commission may adopt rules to establish standards for a customer's voluntary disconnection from an investor-owned gas utility's gas distribution system.
• On or before July 1, 2024, the commission to examine existing investor-owned electric utility tariffs, policies, and practices to determine if the tariffs, policies, and practices pose a barrier to the beneficial electrification of buildings with respect to charges imposed for the cost of transformer or service upgrades.

Section 6 authorizes requires the commission to allow a wholesale customer of an investor-owned utility to intervene in a proceeding regarding the commission's consideration of the investor-owned utility's application for cost recovery from customers.Section 7 appropriates:

• $1,265,551 from the public utilities commission fixed utility fund to the department of regulatory agencies for use by the public utilities commission, with $713,745 reappropriated to the department of law; and
• $142,749 from the legal services cash fund to the department of law from revenue received from the Colorado energy office that originates as custodial federal funds that the office has authority to expend.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)