New Colorado rules could limit natural gas line construction, expansion
Dec. 16—Natural gas for heating, cooking and hot water could be harder — or more expensive — to come by with the advent of new Colorado rules scrutinizing new gas line construction, or extending existing lines.
New rules affecting gas utility companies have the potential to limit system expansion and increase the costs of installing natural gas in new construction, say officials at the Colorado Energy Office.
Xcel Energy officials warned the new rules have the potential to, for all intents and purposes, ban line extensions.
The new planning rules for gas utilities with more than 90,000 retail customers are aimed at reducing greenhouse gas emissions, as ordered by the General Assembly with the passage of the "Adopt Programs Reduce Greenhouse Gas Emissions Utilities" Senate Bill 21-264 and House Bill 21-1238, "Public Utilities Commission Modernize Gas Utility Demand-side Management Standards." The Colorado Public Utilities Commission (PUC) implemented the rules Dec. 1.
PUC officials say the new rules are comprehensive and at the forefront of the evolution of the gas utility industry.
"We foresee this rulemaking as one incremental step in the larger evolution of the shifting regulatory framework for the gas industry," according to the ruling.
Gov. Jared Polis' Greenhouse Gas Reduction Roadmap requires gas utilities to achieve greenhouse gas reductions of 4% by 2025 and 22% by 2030.
Natural gas utilities must now inform the commission about the costs of building new natural gas infrastructure before spending money on projects.
The commission will then "evaluate the need for projects up-front and ensure appropriate oversight of near-term and long-term investments in gas system infrastructure."
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The new rules will help gas utility businesses achieve "substantial reductions in statewide greenhouse gas emissions," according to the Colorado Energy Office.
During a 14-month public process beginning in October 2021, the commission held community and public comment hearings across the state and received more than 300 public comments.
"Today's decision requiring comprehensive planning from regulated gas utilities will not only help reduce greenhouse gas emissions; it will also protect consumers by requiring rigorous examination of utilities' large capital investments in the gas system and ensuring that existing ratepayers do not subsidize expansion of the gas system to serve new development," said Will Toor, Executive Director of the Colorado Energy Office, in a news release.
In comments to the commission, Xcel Energy officials characterized the provisions requiring those who propose expanding gas line infrastructure to pay the full costs up front as a "de facto" ban on gas line extensions that is unfair to new customers.
"Xcel Energy is still evaluating the new rules and there will likely be a Public Utilities Commission proceeding to determine exactly how to implement them," said Xcel Spokesperson Michelle Aguayo in a statement to The Denver Gazette. "Our focus will be on the fairness of all charges, so new customers do not end up paying for the same equipment twice — once through an upfront charge and then again through their standard monthly bills.
Aguayo noted Xcel's policies already require 75% of costs are paid by the developer. The new rules would eliminate a $714 credit that Xcel currently extends to new homes, Aguayo said.
A group of conservation advocates — including Conservation Colorado, Natural Resources Defense Council, Western Resource Advocates, Sierra Club, and Southwest Energy Efficiency Project — argued that the rule for line extensions didn't go far enough, in part because it "fails to consider the social externalities of continued connections to the gas system, such as climate and air pollution externalities."
The commission said the proper place to address such issues is during the process of approving the utility's tariff schedules, which can include such specific requirements.
