May 8, 2023
Western Resource Advocates today praised the approval of Senate Bill 23-291, which enacts measures to protect customers from volatile fossil gas price spikes. The bill takes several critical steps to protect ratepayers, including requiring utilities to eliminate gas line extension allowances — expensive subsidies paid by utility ratepayers to developers for new gas line hook-ups. Colorado is the second state in the U.S. to eliminate these subsidies. The bill also requires utilities to improve the cost efficiency of electricity production while minimizing fuel costs, saving Colorado ratepayers money.
“This historic measure will help shield Coloradans from volatile fossil gas prices and lays the foundation for a long-term transition to cleaner energy,” said Meera Fickling, senior climate policy analyst at WRA. “The Utility Regulation Act helps ensure that the resource investments that utilities make are strategic and forward-looking, and that ratepayers won’t be saddled with paying off fossil-fuel infrastructure for decades to come as our state works to decarbonize.”
Ending gas line extension allowances and nudging developers away from building new properties with gas from the start is consistent with Colorado’s climate goals. In addition, all-electric new homes are cheaper than homes built with both gas and electric. Eliminating these allowances does not prevent a developer from building new homes that use gas, but it ensures that current customers are not subsidizing expansion of the fossil gas system, which would increase pollution and incur unnecessary costs for ratepayers.
For most ratepayers across the state this past winter, utility bills doubled or even tripled due in large part to the skyrocketing cost of fossil gas that most Coloradans depend on to heat their homes. The Colorado Legislature responded by appointing a Joint Select Committee on Rising Utility Rates, which heard testimony from utility companies, consumer advocates, ratepayers and conservation groups, including WRA. The Utility Regulation bill is a historic step by the Colorado Legislature to protect consumers against future rate spikes due to volatile gas prices and the rising cost of fossil gas investments.
The Utility Regulation bill advances several policy solutions designed to protect Colorado ratepayers from the burden of increasing gas utility bills, including:
- Ending expensive subsidies for fossil gas infrastructure and removing barriers to cleaner electric appliances.
- Ending penalties imposed on utility customers that voluntarily terminate gas service.
- A requirement that investor-owned utilities, such as Xcel Energy and Black Hills Energy, must file gas price risk management plans with the Public Utilities Commission by Nov. 1 that address the volatility of fuel costs that are subsequently passed through to ratepayers.
- The adoption of new commission rules by Jan. 1, 2025, that will help protect ratepayers from volatile gas prices by, among other measures, incentivizing utilities to minimize fuel costs in electricity production.
- Reducing unnecessary incentives for gas infrastructure investments by utilities.
- Directing the Colorado Energy Office to conduct a study of gas utility depreciation schedules, to ensure today’s investments are paid off by customers who will actually use the infrastructure.
- Limiting how utilities can recoup the costs for advertising, lobbying, and legal expenses associated with public relations campaigns designed to support higher utility rates.
The lead sponsors of SB23-291 are state Senate President Steve Fenberg, Sen. Lisa Cutter, House Speaker Pro Tempore Chris deGruy Kennedy and Rep. Matthew Martinez. The bill now heads to the desk of Gov. Jared Polis to be signed into law.