Colorado’s Opportunity to Clean Up Electricity 

Colorado has the opportunity to take a significant step toward a clean energy economy by reducing greenhouse gas emissions from electricity production and transitioning to a cleaner, healthier energy future. A bill to be considered by the state legislature would set targets for electric utilities to reduce greenhouse gas emissions 95 percent (below 2005 levels) by 2035 and 100 percent by 2040. These targets would be subject to reliability standards and cost limitations, ensuring the transition occurs in a way that protects customers and the electrical system. 

This legislation builds on Colorado’s longstanding commitment to clean energy, seeking to codify the governor’s long-stated priority of achieving 100 percent clean electricity by 2040. While current state law sets greenhouse gas reduction targets for the electric sector through 2030, without clear and enforceable targets into coming decades, the state risks stalling on its long-term climate goals and falling behind in the clean energy economy. Establishing these benchmarks now would allow utilities to plan for an affordable and reliable clean energy transition, particularly in light of federal uncertainty and threats to clean energy progress. 

Key provisions of the bill include: 

Cost and reliability guardrails: In their resource planning, utilities would model pathways to reduce greenhouse gas emissions 95 percent by 2035 and 100 percent by 2040. The bill would apply guardrails so that plans must meet grid reliability requirements and fall under a maximum rate impact, following existing standards where the incremental, annual average cost increase must be less than 1.5 percent of electricity rates. If a utility cannot meet the emissions targets due to costs or reliability issues, it would seek to achieve the targets in the earliest year possible and to maximize cumulative greenhouse gas reductions on the way to meeting the targets (within the maximum rate impact). 

Advanced energy technology evaluation: In preparing for a clean energy future, the bill establishes new procedures to allow utilities and the Public Utilities Commission (PUC) to pursue advanced energy technologies, like geothermal energy and long-duration battery storage, that may take longer than traditional planning and procurement methods. Utilities would model advanced energy technologies in their resource planning, and the PUC could evaluate and allow cost recovery of these options in staged phases. This establishes guardrails to protect consumers while allowing consideration and investment in future energy technology that helps meet climate goals. 

Future-proofing data center growth: The bill also seeks to address increasing energy demand from new large loads like data centers, preventing other customers from paying the costs of serving new large loads and requiring the PUC to prioritize zero-emission resources for these large new loads. These provisions in the bill help ensure that future development of data centers and other large electrical loads doesn’t increase rates for other residents and won’t hinder meeting climate goals. 

Reducing emissions from the power sector is critical to meeting Colorado’s economy-wide climate commitments; as such, reductions from electricity production must lead ahead of other sectors. A cleaner grid enables further decarbonization in transportation, buildings, and other industries that will increasingly rely on electricity as fuel. 

Investing in clean energy and storage can help boost Colorado’s economy, creating family-supporting jobs of the future. Cleaning up electricity production is also important for public health and environmental justice. Cutting emissions from power plants will lead to cleaner air and healthier communities, especially for those most affected by poor air quality: low-income residents, communities of color, older adults, and individuals with disabilities. 

Setting future targets for emissions reductions from electric utilities is critical for a more sustainable, equitable energy future in Colorado. By codifying future clean energy targets and ensuring that affordability and reliability remain central to the transition, the proposed legislation would help cement Colorado’s position as a national leader in climate action and develop an electric sector for the future.