Voluntary Reduce Greenhouse Gas Natural Gas Utility

The bill requires the public utilities commission (PUC) to adopt by rule, no later than July 31, 2022, greenhouse gas (GHG) emission reduction programs (reduction programs) for large natural gas utilities (those that have at least 250,000 customer accounts in Colorado) and small natural gas utilities (those that have fewer than 250,000 customer accounts in Colorado) (collectively, utilities). Municipally owned utilities may, but need not, participate in a reduction program. The rules must include reporting requirements and a process for utilities to fully recover qualified investments, which are prudently incurred costs associated with a reduction program.

The bill establishes the following GHG emission reduction targets, using a utility's 2019 GHG emissions as a baseline:

• By January 1, 2025, at least 5%;
• By January 1, 2030, at least 10%; and
• On and after January 1, 2035, at least 15%.

GHG emission reductions from the delivery of natural gas to other utilities and transportation sector retail customers are excluded from the reduction programs. The following sources of GHG emission reductions are included in the reduction programs:

• Methane leaked from the transportation and delivery of natural gas from natural gas distribution and service pipelines; and
• Carbon dioxide emitted by the utility's retail customers (other than those in the transportation sector) as a result of the combustion of natural gas delivered by the utility.

GHG emission reductions can be achieved by:

• Using renewable natural gas, which must account for at least 35% of the emission reductions;
• Emission offsets;
• Methane emission reductions from a variety of mechanisms; and
• Other programs developed by the utility and approved by the PUC that demonstrate GHG emission reductions.

If a large utility's total incremental annual cost to meet the GHG emission reduction targets exceeds 2% of the large utility's total revenue requirement for a particular year, the large utility shall not make additional qualified investments under the reduction program for that year without approval from the PUC.

Small utilities may opt in to the reduction program as established by the PUC by rule. The rule must include tradeable credits and a rate cap limiting the small utility's costs of making qualified investments.

For included emission reductions and until 2025, a utility participating in a reduction program is not subject to any additional GHG emission reduction requirements or required to incur any additional costs under Colorado's generally applicable GHG emission reduction requirements if the utility:

• Files with the PUC a plan that contains approvable and cost-effective programs that make progress toward the GHG emission reduction targets and are projected to meet either the applicable emission reduction targets or the applicable retail rate impact;
• Reports GHG emission reductions consistent with the accounting methodology established by the division of administration in the department of public health and environment; and
• Is either projected to meet the GHG emission reduction targets in an applicable year or the PUC finds that the projected costs to achieve the emission reductions have met the applicable retail rate impact.

The bill gives the oil and gas conservation commission the authority to authorize class VI injection permits, which authorize the deep sequestration of carbon dioxide.

(Note: This summary applies to this bill as introduced.)