Modernize Energy Distribution Systems

The act requires the office of future of work to create a grant program, in coordination with the Colorado energy office, for lineworker apprenticeship programs (grant program). In connection with the grant program, the office of future of work must create a competitive application process and select apprenticeship programs that meet certain training and matching requirements. On July 1, 2024, the state treasurer must transfer $800,000 from the general fund to the Colorado lineworker apprenticeship grant program cash fund, which is created in the act, for the purposes of the grant program.

The act also requires an investor-owned electric utility that serves 500,000 customers or more in the state (qualifying retail utility) to upgrade the qualifying retail utility's distribution systems as necessary to support the:

• Achievement of the state's beneficial and transportation electrification and decarbonization goals; and
• Implementation of federal, state, regional, and local air quality and decarbonization targets, standards, plans, and regulations (decarbonization targets and standards).

In connection with these goals and decarbonization targets and standards, a qualifying retail utility is required to:

• Commence a data collection process to inform future energization timelines;
• Adopt certain cost caps;
• Propose to the public utilities commission (commission) the use of an optional flexible interconnection or energization tariff or phased interconnection or energization agreement by a customer as an alternative to system upgrades that would otherwise be required for interconnection or energization; and
• Establish a procedure for customers with a hybrid facility to complete the interconnection and energization process through a single application.

A qualifying retail utility is required to identify interconnection and load hosting capacity for distributed energy resources for disproportionately impacted communities within its service territory.

Prior to the establishment of a grid modernization adjustment clause, a qualifying retail utility shall recover forecasted investments placed into service and costs incurred for certain capital investment and operations and maintenance expenses (distribution activities) for a period of time ending on December 31, 2025. Recovery of the costs associated with the distribution activities must occur through the transmission cost adjustment clause or another existing adjustment clause, subject to certain conditions.

Current law requires certain utilities to file a distribution system plan (plan) with the commission. The act also requires the plans of a qualifying retail utility to create sufficient hosting capacity across the qualifying retail utility's electrical distribution system to support the implementation of the decarbonization targets and standards and certain other laws, rules, plans, and policies.

In developing a plan, a qualifying retail utility must consult with and provide opportunities to engage disproportionately impacted communities.

As part of a plan proceeding, a qualifying retail utility is required to present at least 2 future planning scenarios with corresponding investments to show future different states of the distribution system. In evaluating a qualifying retail utility's plans, the commission must evaluate whether the plan satisfies certain criteria. In addition, the plan must include a performance-based framework, which must consist of certain specified components.

A qualifying retail utility must include in the qualifying retail utility's plan an analysis of current and future qualified staffing levels necessary to comply with state laws regarding distribution system planning (adequate staffing levels). The commission must review whether each qualifying retail utility's plan has adequate staffing levels before the qualifying retail utility's plan may proceed.

A qualifying retail utility must ensure that, in any projects undertaken to implement a plan, all labor is performed by the employees of the qualifying retail utility or by a contractor that meets certain labor requirements.

The commission must open a rule-making, for a qualifying retail utility, to consider and establish rules regarding energization timelines; interconnection; interconnection, energization, and electrification of end uses; and maximum individual customer cost caps or fees.

Subject to commission review and approval, a qualifying retail utility is required to recover certain projected costs related to distribution activities as part of the qualifying retail utility's plans. If the commission finds that the distribution activities benefit or advance the decarbonization targets and standards or state energy policy goals, recovery of the costs must occur through the grid modernization adjustment clause. For distribution system activities that do not benefit or advance the decarbonization targets and standards or state energy policy goals, recovery of the costs may occur through the grid modernization adjustment clause if the qualifying retail utility meets the criteria established in the performance-based framework in the qualifying retail utility's approved plan. A qualifying retail utility is required to make an annual grid modernization adjustment clause advice letter filing with the commission no later than November 1 of each year with an effective date of January 1 of the subsequent year.

No later than February 1, 2025, a qualifying retail utility is required to create and file with the commission an application to implement a virtual power plant program, including a tariff for performance-based compensation for a qualified virtual power plant. The virtual power plant program and tariff must include and implement certain requirements. A qualifying retail utility may apply to recover certain business costs to facilitate a virtual power plant program through the grid modernization adjustment clause.

By January 1, 2025, a qualifying retail utility is required to file a plan with the commission to implement programs for the undergrounding of utility distribution infrastructure (undergrounding) in nonfranchised areas of the qualifying retail utility in the state using 1% of the area's gross electric revenues from the prior year. A qualifying retail utility must also consider the public benefit of undergrounding and other community benefit investments in its plans.

For the 2024-25 state fiscal year, $420,500 is appropriated from the public utilities commission fixed utility fund to the department of regulatory agencies for use by the commission as follows:

• $382,670 for personal services; and
• $37,830 for operating expenses.

APPROVED by Governor May 22, 2024

EFFECTIVE May 22, 2024
(Note: This summary applies to this bill as enacted.)