§ 40-3-120 — Fuel cost sharing - gas utilities - electric utilities - rules

Colorado § 40-3-120

• Jurisdiction: Colorado
• Title 40: Utilities
• Art.: Regulation of Rates and Charges

Text

(1) (a)
On or before November 1, 2023, an investor-owned gas utility shall file with the
commission a gas price risk management plan that includes proposals for leveling
or reducing the volatility of fuel costs that are recovered pursuant to the utility's
gas cost adjustment filings. Such plan must include a maximum per-month fuel
cost that accounts for price fluctuations based on seasonality and can be
automatically recovered through the gas cost adjustment mechanism. The plan may
include other elements such as physical hedging, financial hedging, fuel storage, or
long-term contracting.

(b) The commission shall allow any prudently incurred costs above the
maximum monthly fuel cost included in an investor-owned gas utility's plan
pursuant to subsection (1)(a) of this section to be recorded in a deferred balance
that is recoverable and amortized over an appropriate timeline of no more than five
years with financing costs, as determined by the commission.

(c) The commission shall approve, amend, or deny a plan submitted pursuant
to this subsection (1) based on a determination of the best interests of a utility's
ratepayers, insofar as the commission finds that the plan is in the public interest.

(2) (a) On or before January 1, 2025, the commission shall adopt rules to
establish mechanisms to align the financial incentives of an investor-owned electric
or gas utility with the interests of the utility's customers regarding incurred fuel
costs.

(b) The mechanisms established by rule pursuant to subsection (2)(a) of this
section must be designed to protect customers and to improve the utility's
management of fuel costs. The commission shall tailor the mechanisms to apply to
different utilities based on a utility's size or ability to implement the mechanisms.

(c) The commission may establish a symmetrical incentive for the utility to
successfully implement the mechanisms.

(3) In adopting the rules pursuant to subsection (2)(a) of this section, the
commission:

(a) Shall consider:

(I) Symmetrically allocating an amount of fuel price risk to the investor-owned electric or gas utility, subject to reasonable parameters, including:

(A) A range of outcomes within which no risk sharing occurs; and

(B) A cap on any incentive or cost share that results from the risk-mitigation
mechanism; and

(II) Mechanisms to improve electricity production cost efficiency while
minimizing fuel costs, such as symmetrically allocating a portion of improvements
or degradations in electricity production per dollar of fuel or per dollar of
acquisition costs incurred; and

(b) Shall consider, to the extent such information is relevant:

(I) The financial health of the utility and corresponding impacts on customer
affordability; and

(II) The utility's ability to make investments to achieve the state's energy
policy objectives in an affordable manner for customers.

(4) Nothing in this section:

(a) Shall be construed to automatically shift risk to the investor-owned
electric or gas utility; or

(b) Warrants an automatic adjustment to the amount of allowable return on
equity or any other rate-making metric.

Legislative History

Source: L. 2023: Entire section added, (SB 23-291), ch. 163, p. 715, � 4, effective August 7.