§ 40-2-125 — Eminent domain restrictions

Colorado § 40-2-125

• Jurisdiction: Colorado
• Title 40: Utilities
• Art.: Public Utilities Commission -

Text

(1) A qualifying retail utility shall
not have the authority to condemn or exercise the power of eminent domain over
any real estate, right-of-way, easement, or other right pursuant to section 38-2-101,
C.R.S., to site the generation facilities of a renewable energy system used in whole
or in part to meet the electric resource standards set forth in section 40-2-124. This
section shall not be construed to limit the authority of a home rule municipality
under article XX of the Colorado constitution.

(2) Section 3 of this initiated measure provides that this section and section
40-2-124 shall be effective December 1, 2004.

Source: Initiated 2004: Entire section added, see L. 2005, p. 2337, effective
December 1, 2004, proclamation of the Governor issued December 1, 2004. L. 2005: Entire section amended, p. 238, � 2, effective August 8; (2) added by revision, see L.
2005, p. 2340, � 3.

Editor's note: (1) A declaration of intent was contained in the initiated
measure, Amendment 37, and is reproduced below:

SECTION 1. Legislative declaration of intent:

Energy is critically important to Colorado's welfare and development, and its
use has a profound impact on the economy and environment. Growth of the state's
population and economic base will continue to create a need for new energy
resources, and Colorado's renewable energy resources are currently underutilized.

Therefore, in order to save consumers and businesses money, attract new
businesses and jobs, promote development of rural economies, minimize water use
for electricity generation, diversify Colorado's energy resources, reduce the impact
of volatile fuel prices, and improve the natural environment of the state, it is in the
best interests of the citizens of Colorado to develop and utilize renewable energy
resources to the maximum practicable extent.

(2) This initiated measure was approved by a vote of the registered electors
of the state of Colorado on November 2, 2004. The vote count for the measure was
as follows:

FOR: 1,066,023

AGAINST: 922,577

40-2-125.5. Carbon dioxide emission reductions - goal to eliminate by
2050 - legislative declaration - interim targets - submission and approval of plans
- definitions - cost recovery - reports - rules. (1) Legislative declaration. The
general assembly finds and declares that:

(a) It is a matter of statewide importance to promote the development of
cost-effective clean energy and new technologies and reduce the carbon dioxide
emissions from the Colorado electric generating system;

(b) The creation of a low-cost, reliable, and clean electricity system is critical
to achieving the level of greenhouse gas emissions necessary to avoid the worst
impacts of climate change and advancing a robust and efficient low-carbon
economy for the state of Colorado and the nation;

(c) Technology advancement has already allowed Colorado to achieve
reductions in carbon dioxide emissions from the electric utility sector, and
continued technology development is key to extend progress toward a reliable,
low-cost, clean energy future;

(d) Alternative financing mechanisms may result in lower costs to electric
utility customers; therefore, it is helpful to provide alternative financing
mechanisms that utilities may use to reduce the total amount of costs being
included in customer rates resulting from accelerating the retirement of electric
generating facilities; and

(e) A bold clean energy policy will support this progress and allow
Coloradans to enjoy the benefits of reliable clean energy at an affordable cost.

(2) Definitions. As used in this section, unless the context otherwise
requires:

(a) Clean energy plan means a plan filed by a qualifying retail utility as part
of its electric resource plan to reduce the qualifying retail utility's carbon dioxide
emissions associated with electricity sales to the qualifying retail utility's
electricity customers by eighty percent from 2005 levels by 2030, and that seeks
to achieve providing its customers with energy generated from one-hundred-percent clean energy resources by 2050.

(b) (I) Clean energy resource means any electricity-generating technology
that generates or stores electricity without emitting carbon dioxide into the
atmosphere.

(II) Clean energy resource includes, without limitation:

(A) Eligible energy resources as defined in section 40-2-124 (1)(a); and

(B) Nuclear energy, including nuclear energy projects awarded funding
through the United States department of energy's advanced nuclear reactor
programs.

(c) (I) Qualifying retail utility means a retail utility providing electric service
to more than five hundred thousand customers in this state or any other electric
utility that opts in pursuant to subsection (3)(b) of this section.

(II) Qualifying retail utility does not include a municipally owned utility.

(3) Clean energy targets. (a) In addition to the other requirements of this
section, a qualifying retail utility shall meet the following clean energy targets:

(I) By 2030, the qualifying retail utility shall reduce the carbon dioxide
emissions associated with electricity sales to the qualifying retail utility's
electricity customers by eighty percent from 2005 levels.

(II) For the years 2050 and thereafter, or sooner if practicable, the qualifying
retail utility shall seek to achieve the goal of providing its customers with energy
generated from one-hundred-percent clean energy resources so long as doing so is
technically and economically feasible, in the public interest, and consistent with the
requirements of this section.

(III) The qualifying retail utility shall retire renewable energy credits
established under section 40-2-124 (1)(d), in the year generated, by any eligible
energy resources used to comply with the requirements of this section.

(b) Any other electric public utility may opt into the full terms of this entire
section upon notification to the commission.

(4) Submission and approval of plans. (a) The first electric resource plan
that a qualifying retail utility files with the commission after January 1, 2020, must
include a clean energy plan that will achieve the clean energy target set forth in
subsection (3)(a)(I) of this section and make progress toward the one-hundred-percent clean energy goal set forth in subsection (3)(a)(II) of this section in
accordance with the following:

(I) The electric resource plan containing the clean energy plan must utilize a
resource acquisition period that extends through 2030.

(II) The clean energy plan submitted to the commission must set forth a plan
of actions and investments by the qualifying retail utility projected to achieve
compliance with the clean energy targets in subsections (3)(a)(I) and (3)(a)(II) of this
section and that result in an affordable, reliable, and clean electric system.

(III) In the electric resource plan that includes the clean energy plan, the
qualifying retail utility shall clearly distinguish between the set of resources
necessary to meet customer demands in the resource acquisition period and the
additional clean energy plan activities that may be undertaken to meet the clean
energy target in subsection (3)(a)(I) of this section, which may create an additional
resource need for the clean energy plan. These activities may include retirement of
existing generating facilities, changes in system operation, or any other necessary
actions.

(IV) After conducting any procurement process pursuant to subsection (5)(b)
of this section or otherwise, the qualifying retail utility shall set forth the actions
and investments required to fill the additional resource need identified for the clean
energy plan to satisfy the clean energy target in subsection (3)(a)(I) of this section.
These actions and investments may include development of new clean energy
resources, development of new transmission and other supporting infrastructure,
and clean energy resource acquisitions. Any new transmission development is
subject to existing commission and stakeholder transmission planning processes,
as applicable.

(V) The clean energy plan must describe the effect of the actions and
investments included in the clean energy plan on the safety, reliability, renewable
energy integration, and resilience of electric service in the state of Colorado.

(VI) The clean energy plan must set forth the projected cost of its
implementation and anticipated reductions in carbon dioxide and other emissions.

(VII) If the clean energy plan includes accelerated retirement of any existing
generating facilities, the clean energy plan must include workforce transition and
community assistance plans for utility workers impacted by any clean energy plan
and a plan to pay community assistance to any local government or school district,
the voters of which have approved projects the costs of which are expected to be
paid for from property taxes that are directly impacted by the accelerated
retirement of the electric generating facility in an amount equal to the costs of the
voter-approved projects that were expected to be paid from the revenue sources
directly impacted by the accelerated retirement of the projects, including but not
limited to the payment of bonds, notes, or other multiple-fiscal year obligations or
financed purchase of an asset or certificate of participation agreements that have
been issued or entered into to pay the costs of such projects. Any payment of
community assistance shall be reduced on an equivalent basis to the extent that
property tax is derived from new electric infrastructure developed in the same
impacted community. The qualifying retail utility may propose a cost-recovery
mechanism to recover the prudently incurred costs of any workforce transition and
community assistance plans, while giving due consideration to the impact on low-income customers. The qualifying retail utility will not earn its authorized rate of
return on any noncapital costs incurred as part of any workforce transition plan. The
workforce transition and community assistance plans must include, to the extent
feasible, estimates of:

(A) The number of workers employed by the utility or a contractor of the
utility at the electric generating facility;

(B) The total number of existing workers with jobs that will be retained and
the total number of existing workers with jobs that will be eliminated due to the
retirement of the electric generating facility;

(C) With respect to the existing workers with jobs that will be eliminated due
to the retirement of the electric generating facility, the total number and number by
job classification of workers for whom: Employment will end without being offered
other employment by the utility; the workers will retire as planned, be offered early
retirement, or leave voluntarily; the workers will be retained by being transferred to
other electric generating facilities or offered other employment by the utility; and
the workers will be retrained to continue to work for the utility in a new job
classification;

(D) If the utility is replacing the electric generating facility being retired with
a new electric generating facility: The number of workers from the retired electric
generating facility that will be offered employment at the new electric generating
facility and the number of jobs at the new electric generating facility that will be
outsourced to subcontractors. The utility shall develop a training or apprenticeship
program, under the terms of an applicable collective bargaining agreement, if any,
for the maintenance and operation of any new combination generation and storage
facility owned by the utility that does not emit carbon dioxide, to which facility
displaced workers may transfer as appropriate.

(VIII) If the minimum amounts of electricity from eligible energy resources
set forth in section 40-2-124 (1)(c) are satisfied, a qualifying retail utility may
propose to use up to one-half of the funds collected annually under section 40-2-124 (1)(g), as well as any accrued funds, to recover the incremental cost of clean
energy resources and their directly related interconnection facilities. The utility
may account for these funds in calculating the cost of the plan.

(b) The division of administration in the department of public health and
environment shall participate in any proceeding seeking approval of a clean energy
plan developed by a qualifying retail utility pursuant to this section. The division
shall describe the methods of measuring carbon dioxide emissions and shall verify
the projected carbon dioxide emission reductions as a result of the clean energy
plan.

(c) (I) After consulting with the air quality control commission, the division of
administration shall determine whether a clean energy plan as filed under this
section will result in an eighty percent reduction, relative to 2005 levels, in carbon
dioxide emissions from the qualifying retail utility's Colorado electricity sales by
2030 and is otherwise consistent with any greenhouse gas emission reduction
goals established by the state of Colorado. The division shall publish, and shall
report to the public utilities commission, the division's calculation of carbon dioxide
emission reductions attributable to any approved clean energy plan. Nothing in the
division's engagement in this process shall be construed to diminish or override the
commission's authority under this title 40.

(II) Notwithstanding anything in this section to the contrary, the division shall
comply with section 25-7-105 (1)(e)(VIII.2) in making any calculation or
determination pursuant to subsection (4)(c)(I) of this section.

(d) The commission shall approve the clean energy plan if the commission
finds it to be in the public interest and consistent with the clean energy target in
subsection (3)(a)(I) of this section, and the commission may modify the plan if the
modification is necessary to ensure that the plan is in the public interest. In
evaluating whether a clean energy plan submitted to the commission is in the
public interest, the commission shall consider the following factors, among other
relevant factors as defined by the commission:

(I) Reductions in carbon dioxide and other emissions that will be achieved
through the clean energy plan and the environmental and health benefits of those
reductions;

(II) The feasibility of the clean energy plan and the clean energy plan's
impact on the reliability and resilience of the electric system. The commission shall
not approve any plan that does not protect system reliability.

(III) Whether the clean energy plan will result in a reasonable cost to
customers, as evaluated on a net present value basis. In evaluating the cost impacts
of the clean energy plan, the commission shall consider the effect on customers of
the projected costs associated with the plan as set forth in subsection (4)(a)(VI) of
this section as well as any projected savings associated with the plan, including
projected avoided fuel costs.

(e) If the commission finds that approval of the clean energy plan is not in
the public interest, or if the commission modifies the plan, the utility may choose to
submit an amended plan to the commission for approval in lieu of having no plan or
implementing the modified plan. No clean energy plan is effective without
commission approval.

(5) Regulatory matters. (a) Ensuring retail rate stability. (I) The
commission shall establish a maximum electric retail rate impact of one and one-half percent of the total electric bill annually for each customer for implementation
of the approved additional clean energy plan activities, consistent with this
subsection (5). Nothing in this subsection (5)(a) supersedes subsection (3)(a)(I) of
this section.

(II) A qualifying retail utility shall collect revenues for the additional clean
energy plan activities through a clean energy plan revenue rider assessed on a
percentage basis on all retail customer bills, as deemed prudent by the commission.
The revenue rider may be established as early as the year following approval of a
clean energy plan by the commission, and the qualifying retail utility may propose a
commencement date and level no greater than the maximum electric retail rate
impact. The revenue rider shall afford the qualifying retail utility cost-recovery
treatment up to the maximum electric retail rate impact until the first rate case
following the final implementation of the clean energy plan, at which time the
remaining costs and savings associated with the clean energy plan will be
incorporated into base rates. The qualifying retail utility may propose to adjust the
level of the retail rate rider over time so long as it does not exceed the maximum
retail rate impact and as deemed prudent by the commission. Nothing in this
subsection (5) affects the commission's authority to evaluate the prudence of costs
associated with approved clean energy plan activities.

(III) The clean energy plan revenue rider will be utilized for costs of a
qualifying retail utility's clean energy plan capital investments and operating and
related expenses, exclusive of:

(A) Fuel and transmission costs;

(B) Costs associated with the capital investments and operating and related
expenses within the overall approved resource portfolio necessary to fully satisfy
the resource need identified for the electric resource plan without the clean energy
plan;

(C) The incremental costs of eligible energy resources recovered with funds
collected under section 40-2-124 (1)(g); and

(D) The incremental costs of any clean energy resources and their directly
related interconnection facilities that, subject to commission approval, are
recovered with funds collected under section 40-2-124 (1)(g) in accordance with
subsection (4)(a)(VIII) of this section. Savings associated with the plan will return to
customers through existing rate riders and base rate adjustments.

(IV) The clean energy plan revenue rider shall afford customers certainty on
the maximum rate impact of the approved additional clean energy plan activities
through at least calendar year 2030. Annually, the qualifying retail utility shall file a
report with the commission indicating, at a minimum:

(A) The amount of rider collections;

(B) The revenue requirement associated with the approved additional clean
energy plan activities to be paid for from the rider collections;

(C) Any positive or negative rider account balance;

(D) Interest expense associated with the revenue rider balance; and

(E) Any other information required by the commission.

(V) In the first rate case following the final implementation of the clean
energy plan, the commission shall conduct a final reconciliation of the clean energy
plan revenue rider and determine how to account for any positive or negative rider
balance. In the manner determined by the commission, any remaining positive
balance shall be returned to customers or used to reduce customer rates and any
negative balance shall be incorporated into the qualifying retail utility's rates.

(b) The qualifying retail utility shall utilize a competitive bidding process, as
defined by the commission in rules, to procure any energy resources to fill the
cumulative resource need derived from the electric resource plan and the clean
energy plan in subsection (4)(a)(III) of this section. The commission shall allow the
qualifying retail utility, inclusive of any ownership by its affiliates, to own a target of
fifty percent of the energy and capacity associated with the clean energy resources
and any other energy resources developed or acquired to meet the resource need,
as well as all associated infrastructure, if the commission finds the cost of utility or
affiliate ownership of the generation assets comes at a reasonable cost and rate
impact. Utility ownership may come from utility or affiliate self-builds, build-transfers from independent power producers, or sales of existing assets from
independent power producers or similar commercial arrangements. Nothing in this
subsection (5)(b) alters the commission's authority under subsection (4)(d) of this
section.

(c) Any actions, including transmission development, taken by the qualifying
retail utility shall be presumed prudent to the extent those actions are a part of an
approved clean energy plan.

(d) For the purposes of this section, the clean energy target evaluation will
be based upon the qualifying retail utility's electricity sales within its electric
service territory as it existed on January 1, 2019. In the event of a significant
acquisition, the qualifying retail utility may file within one year after the acquisition
an additional clean energy plan to address that acquisition, and the commission
shall consider the additional clean energy plan consistent with the goals of this
section.

(e) The commission may, on its own motion or upon application by a
qualifying retail utility, amend an approved clean energy plan if amendment is
necessary to ensure the reliability and resilience of the electric system. The
commission may require the qualifying retail utility to provide such periodic reports
on the reliability and resiliency of the electric system as it may deem appropriate to
ensure the clean energy plan does not adversely impact reliability or resiliency.

(f) The commission shall consider affected communities within the filing
qualifying retail utility's service territory with a tangible and pecuniary interest, and
organizations representing those communities shall be presumed to have standing
in a proceeding seeking approval of any clean energy plan filed pursuant to this
section.

(g) (I) A clean energy plan voluntarily filed by a municipal utility or a
cooperative electric association that has voted to exempt itself from regulation by
the commission pursuant to article 9.5 of this title 40 shall be deemed approved by
the commission as filed if:

(A) The division of administration, in consultation with the commission,
verifies that the plan demonstrates that, by 2030, the municipal utility or
cooperative electric association will achieve at least an eighty-percent reduction in
greenhouse gas emissions caused by the entity's Colorado electricity sales relative
to 2005 levels; and

(B) The clean energy plan has previously been approved by a vote of the
entity's governing body.

(II) Voluntary submission of a clean energy plan by a municipal utility or a
cooperative electric association does not alter the entity's regulatory status with
respect to the commission, including under article 9.5 of this title 40.

(h) Nothing in this subsection (5) precludes the use of bonds as a mechanism
for recovering utility capital in a retired electric generating facility.

(6) Reports. One year after approval of any electric resource plan that
incorporates a clean energy plan, the qualifying retail utility shall prepare a report
to the governor, the general assembly, the public utilities commission, and the air
quality control commission outlining progress toward the clean energy targets set
forth in this section. The report must set forth the clean energy resources
developed under any clean energy plan, the cost and customer impact of those
clean energy resources, the effect of any approved clean energy plan on system
reliability, and any other relevant information. The report must also identify the
need for new or additional technology development necessary to achieve the clean
energy targets of this section.

(7) Future electric resource plans. Any electric resource plan submitted to
the commission after approval of the clean energy plan must include an update on
the progress made toward the approved clean energy plan, as well as actions and
investments by the qualifying retail utility projected to achieve compliance with the
emission reduction target identified in subsection (3)(a)(I) of this section and make
progress toward the one-hundred-percent clean energy goal set forth in subsection
(3)(a)(II) of this section. The commission may solicit input from the division of
administration for assistance in evaluating the emission reductions associated with
any future electric resource plan and consistent with the clean energy targets of
this section. The commission shall review the qualifying retail utility's actions and
investments in accordance with the standards set forth in subsection (4)(d) of this
section.

Legislative History

Source: L. 2019: Entire section added, (SB 19-236), ch. 359, p. 3291, � 5, effective May 30. L. 2021: IP(4)(a)(VII) amended, (HB 21-1316), ch. 325, p. 2062, � 78, effective July 1. L. 2023: (4)(c) amended, (SB 23-198), ch. 352, p. 2118, � 3, effective June 5. L. 2025: (2)(b) amended, (HB 25-1040), ch. 45, p. 209, � 3, effective August 6.