Development of Thermal Energy Resources

SENATE BILL 26-142
BY SENATOR(S) Ball and Kipp, Amabile, Benavidez, Bridges, Cutter,
Daugherty, Exum, Jodeh, Lindstedt, Mullica, Roberts, Snyder, Coleman;
also REPRESENTATIVE(S) Joseph and Gonzalez R., Bacon, Duran,
Goldstein, Jackson, Marshall, McCormick, Nguyen, Paschal, Phillips,
Rutinel, Rydin, Smith, McCluskie.
CONCERNING THE DEVELOPMENT OF THERMAL ENERGY RESOURCES.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. Legislative declaration. (1) The general assembly
finds and declares that:
(a) In 2021, the general assembly enacted Senate Bill 21-264,
requiring regulated gas utilities to develop clean heat plans to reduce
greenhouse gas emissions;
(b) In 2023, the general assembly enacted House Bill 23-1252,
which authorized thermal energy networks, integrated thermal energy into
the clean heat standard, and required a large gas utility to propose pilot
thermal energy network projects;
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act.
( c) The Colorado energy office has invested substantial public funds
in geothermal and thermal energy network grants and tax credits, and
communities across the state are pursuing neighborhood-scale alternatives
to natural gas infrastructure;
( d) While existing law does not prohibit municipalities from
operating thermal energy networks that include private participants and
does not prohibit industrial facilities from selling recovered waste heat, the
absence of express statutory authority for these activities imposes
unnecessary soft costs on every entity that attempts to conduct those
activities, including legal fees, financial risk premiums, and extended
project timelines;
( e) These soft costs are disproportionately burdensome for small and
rural communities and prevent publicly funded thermal energy project
operators from entering into contracts that make financial sense; and
(f) Geothermal energy and thermal energy networks have the
potential to provide stable, predictable, and lower-cost energy for heating
and cooling, and expanding access to geothermal and thermal energy
resources can help reduce energy burdens for income-qualified households
and improve energy affordability for Coloradans.
(2) Therefore, the general assembly declares that:
(a) It is the purpose of this act to reduce soft costs and legal
ambiguity associated with thermal energy network deployment and
industrial waste heat recovery by providing express statutory authority for
these activities that otherwise lack clear legal pathways; and
(b) This act does not limit any authority that a local government
already has under the local government's organic statute or other state law
to provide thermal energy service; and
( c) This act does not create new state spending obligations or new
regulatory mandates on existing or new regulatory bodies.
SECTION 2. In Colorado Revised Statutes, add 29-1-208 as
follows:
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29-1-208. Local government thermal energy aggregation -
contracting authority-revenue bonds -private operators -definitions.
(1) As USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE
REQUIRES:
(a) "LOCAL GOVERNMENT" MEANS A STATUTORY OR HOME RULE
CITY, TOWN, COUNTY, CITY AND COUNTY, OR SPECIAL DISTRICT.
(b) "PUBLIC UTILITIES COMMISSION" MEANS THE PUBLIC UTILITIES
COMMISSION CREATED IN SECTION 40-2-101.
( C) "THERMAL ENERGY" HAS THE MEANING SET FORTH IN SECTION
40-3.2-108 (2)(r).
( d) "THERMAL ENERGY NETWORK" HAS THE MEANING SET FORTH IN
SECTION 40-3.2-108 (2)(s).
(e) "THERMAL ENERGY SERVICE AGREEMENT" MEANS A CONTRACT
BETWEEN A LOCAL GOVERNMENT AND ONE OR MORE OTHER PARTIES FOR THE
PURCHASE, SALE, DELIVERY, OR CAPACITY RESERVATION OF THERMAL
ENERGY OR THERMAL ENERGY NETWORK SERVICE.
(2) (a) A LOCAL GOVERNMENT MAY AGGREGATE THERMAL ENERGY
DEMAND FOR BUILDINGS AND FACILITIES OWNED OR MANAGED BY THE
LOCAL GOVERNMENT WITH DEMAND FROM OTHER ENTITIES, INCLUDING
PRIVATE ENTITIES THAT ELECT TO PARTICIPATE IN THE THERMAL ENERGY
NETWORK.
(b) A LOCAL GOVERNMENT THAT AGGREGATES THERMAL ENERGY
DEMAND PURSUANT TO THIS SUBSECTION (2) IS NOT CONSIDERED A PUBLIC
UTILITY OR A MUNICIPAL UTILITY AND IS NOT SUBJECT TO REGULATION BY
THE PUBLIC UTILITIES COMMISSION.
(3) (a) A LOCAL GOVERNMENT MAY ENTER INTO THERMAL ENERGY
SERVICE AGREEMENTS FOR A TERM NOT TO EXCEED TWENTY-FIVE YEARS,
SUBJECT TO ANNUAL APPROPRIATION BY THE LOCAL GOVERNMENT.
(b) A LOCAL GOVERNMENT MAY ENTER INTO INTERGOVERNMENTAL
AGREEMENTS WITH OTHER LOCAL GOVERNMENTS PURSUANT TO SECTION
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29-1-203 FORTHEDEVELOPMENT,OPERATION,ORFINANCINGOFA THERMAL
ENERGY NETWORK.
( C) A LOCAL GOVERNMENT MAY ENTER INTO A CONTRACT WITH A
PRIVATE ENTITY FOR THE DESIGN, CONSTRUCTION, OPERATION,
MAINTENANCE, OR MANAGEMENT OF A THERMAL ENERGY NETWORK ON
BEHALF OF THE LOCAL GOVERNMENT IF THE CONTRACT IS APPROVED BY THE
GOVERNING BODY OF THE LOCAL GOVERNMENT.
( 4) A LOCAL GOVERNMENT OR A PRIVATE ENTITY ON BEHALF OF A
LOCAL GOVERNMENT, OTHER THAN A PRIVATE ENTITY THAT IS A UTILITY
REGULATED BY THE PUBLIC UTILITIES COMMISSION OR AN AFFILIATE OF A
PUBLICUTILITY,AS DEFINED IN SECTION 40-3-104.3 (4)(b), THAT OPERATES,
MAINTAINS, OR MANAGES A THERMAL ENERGY NETWORK IS NOT CONSIDERED
A MUNICIPAL UTILITY OR A PUBLIC UTILITY, AS DEFINED IN SECTION
40-1-103, AND IS NOT SUBJECT TO REGULATION BY THE PUBLIC UTILITIES
COMMISSION.
(5) (a) (I) IF A LOCAL GOVERNMENT IS OTHERWISE AUTHORIZED BY
LA WTO ISSUE BONDS, THE LOCAL GOVERNMENT MAY ISSUE REVENUE BONDS,
GENERAL OBLIGATION BONDS, OR OTHER FINANCING MECHANISMS
AUTHORIZED BY LAW FOR THE PURPOSE OF FINANCING THE DESIGN,
CONSTRUCTION, ACQUISITION, OR IMPROVEMENT OF THERMAL ENERGY
NETWORK INFRASTRUCTURE, INCLUDING PIPES, INTERCONNECTIONS, HEAT
EXCHANGERS, GROUND-SOURCE LOOPS, CUSTOMER CONNECTIONS, AND
OTHER INFRASTRUCTURE RELATED TO THE DISTRIBUTION OF THERMAL
ENERGY.
(II) NOTHING IN THIS SECTION SHALL BE CONSTRUED AS IMPACTING
THE STATUTORY REQUIREMENTS RELATED TO THE LOCAL GOVERNMENT
ACQUISITION OF ELECTRICAL DISTRIBUTION INFRASTRUCTURE.
(b) IF A LOCAL GOVERNMENT ISSUES BONDS PURSUANT TO THIS
SUBSECTION ( 5), THE BONDS MUST BE PAY ABLE SOLELY FROM THE REVENUE
DERIVEDFROMTHEOPERATIONOFTHETHERMALENERGYNETWORKANDDO
NOT CONSTITUTE A GENERAL OBLIGATION OF THE LOCAL GOVERNMENT.
( c) GENERAL OBLIGATION BONDS ISSUED PURSUANT TO THIS
SUBSECTION (5) ARE SUBJECT TO SECTION 20 OF ARTICLE X OF THE STATE
CONSTITUTION AND ALL OTHER APPLICABLE LAWS.
PAGE 4-SENATE BILL 26-142
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION,
NOTHING IN THIS SUBSECTION (5) SHALL BE CONSTRUED TO LIMIT, RESTRICT,
OR OTHERWISE IMPAIR THE BONDING, FINANCING, OR CREDIT-RAISING
AUTHORITY, OR ANY POWERS INCIDENTAL TO THAT AUTHORITY, GRANTED
TO A LOCAL GOVERNMENT BY ITS ORGANIC STATUTE OR ANY OTHER
PROVISION OF ST ATE LAW.
( 6) A LOCAL GOVERNMENT MAY PROVIDE THERMAL ENERGY SERVICE
TO PARTICIPANTS LOCATED OUTSIDE THE JURISDICTIONAL BOUNDARIES OF
THE LOCAL GOVERNMENT IF:
(a) THE LOCAL GOVERNMENT HAS ENTERED INTO AN
INTER GOVERNMENT AL AGREEMENT IN ACCORDANCE WITH SECTION 29-1-203
WITH THE LOCAL GOVERNMENT IN WHICH THE PARTICIPANT RECEIVING THE
THERMAL ENERGY SERVICE IS LOCATED; OR
(b) THE LOCAL GOVERNMENT AND THE PARTICIPANT HA VE ENTERED
INTO A THERMAL ENERGY SERVICE AGREEMENT.
(7) THE PROVISION OF THERMAL ENERGY SERVICE IN ACCORDANCE
WITH THIS SECTION SHALL NOT BE CONSTRUED AS THE PROVISION OF
NATURAL GAS SERVICE AND DOES NOT CONSTITUTE A VIOLATION OF ANY
EXCLUSIVE FRANCHISE AGREEMENT FOR THE DISTRIBUTION OF NATURAL
GAS.
(8) A THERMAL ENERGY SERVICE AGREEMENT ENTERED INTO
PURSUANT TO THIS SECTION MAY BE SUBMITTED AS EVIDENCE OF CUSTOMER
DEMAND IN ANY PROCEEDING BEFORE THE PUBLIC UTILITIES COMMISSION
CONDUCTED PURSUANT TO SECTION 40-4-121.
(9) NOTHING IN THIS SECTION EXPANDS OR LIMITS THE AUTHORITY
OF THE PUBLIC UTILITIES COMMISSION OVER A PUBLIC UTILITY REGULATED
UNDER TITLE 40. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION,
THERMAL ENERGY SYSTEMS AUTHORIZED PURSUANT TO THIS SECTION ARE
NOT REGULATED BY THE PUBLIC UTILITIES COMMISSION AND ARE GOVERNED
BY LOCAL GOVERNMENT CONTRACTING AUTHORITY.
(10) (a) A PUBLIC ELECTRIC UTILITY THAT HAS A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY ISSUED BY THE PUBLIC UTILITIES
COMMISSION TO PROVIDE RETAIL ELECTRIC SERVICE IN THE TERRITORY
PAGE 5-SENATE BILL 26-142
WHERE A THERMAL ENERGY NETWORK FACILITY IS LOCATED HAS THE
EXCLUSIVE RIGHT TO PROVIDE ELECTRIC SERVICE TO THE THERMAL ENERGY
NETWORKFACILITY;EXCEPTTHATTHISSUBSECTION(10)DOESNOTIMPACT
A CUSTOMER'S RIGHT TO UTILIZE RETAIL DISTRIBUTED GENERATION, AS
DEFINED IN SECTION 40-2-124 (l)(a)(VIII).
(b) NOTHING IN THIS SECTION SHALL BE CONSTRUED AS IMPACTING
THE STATUTORY REQUIREMENTS RELATED TO A PUBLIC ELECTRIC UTILITY
OBTAINING A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY ISSUED
BY THE PUBLIC UTILITIES COMMISSION.
(11) (a) EMISSION REDUCTIONS ASSOCIATED WITH A THERMAL
ENERGY NETWORK THAT IS OPERATING IN ACCORDANCE WITH THIS SECTION
AND THAT IS WITHIN THE SERVICE TERRITORY OF A PUBLIC UTILITY THAT IS
REQUIRED TO FILE A CLEAN HEAT PLAN WITH THE PUBLIC UTILITIES
COMMISSION PURSUANT TO SECTION 40-3 .2-108 SHALL BE COUNTED AS PART
OF THE PUBLIC UTILITY'S EMISSION REDUCTION CALCULATIONS RELATED TO
THE UTILITY'S CLEAN HEAT PLAN, EVEN IF THE THERMAL ENERGY NETWORK
IS CONSTRUCTED OR OPERA TED WITHOUT UTILITY INVESTMENT OR
PARTICIPATION.
(b) THE PUBLIC UTILITIES COMMISSION SHALL PROHIBIT THE DOUBLE
COUNTING OF EMISSION REDUCTIONS ASSOCIATED WITH A THERMAL ENERGY
NETWORK.
( C) A LOCAL GOVERNMENT THAT CONSTRUCTS, DEVELOPS, OR
OPERA TES A THERMAL ENERGY NETWORK SHALL NOTIFY THE PUBLIC UTILITY
THAT PROVIDES UTILITY SERVICE TO THE LOCATION WHERE THE THERMAL
ENERGY NETWORK IS LOCATED THAT THE LOCAL GOVERNMENT WILL
CONSTRUCT,DEVELOP,OROPERATEATHERMALENERGYNETWORKPRIORTO
BEGINNING CONSTRUCTION OF THE THERMAL ENERGY NETWORK IN ORDER
TO ALLOW FOR COORDINATION BETWEEN THE LOCAL GOVERNMENT AND THE
PUBLIC UTILITY RELATED TO THE UTILITY' CLEAN HEAT PLAN, TO THE EXTENT
PRACTICABLE.
SECTION 3. In Colorado Revised Statutes, add 30-11-134 as
follows:
30-11-134. Thermal energy network agreements.
PAGE 6-SENATE BILL 26-142
A BOARD OF COUNTY COMMISSIONERS MAY ENTER INTO AGREEMENTS
WITH ONE OR MORE ENTITIES, INCLUDING OTHER LOCAL GOVERNMENT AL
ENTITIES, FOR THE PROVISION OF SERVICE FROM A THERMAL ENERGY
NETWORK IN ACCORDANCE WITH SECTION 40-4-121 (7) OR 29-1-208.
SECTION 4. In Colorado Revised Statutes, 31-15-713, amend
(l)(a) as follows:
31-15-713. Power to sell public works -real property.
( 1) The governing body of each municipality has the power:
(a) To sell and dispose of waterworks, ditches, gasworks,
geothermal systems, solar systems, electric light works, THERMAL ENERGY
NETWORKS AS DEFINED IN SECTION 40-3.2-108 (2)(s), or other public
utilities, public buildings, real property used or held for park purposes, or
any other real property used or held for any governmental purpose. Before
any such sale is made, the question of said THE sale and the terms and
consideration thereof OF THE SALE shall be submitted at a regular or special
election and approved in the manner provided for authorization of bonded
indebtedness by section 31-15-302 (l)(d).
SECTION 5. In Colorado Revised Statutes, 31-15-901, add ( 1 )( e)
as follows:
31-15-901. Miscellaneous powers.
( 1) The governing body of each municipality has the power:
(e) To ENTER INTO AGREEMENTS WITH ONE OR MORE ENTITIES,
INCLUDING OTHER LOCAL GOVERNMENTAL ENTITIES, FOR THE PROVISION OF
SERVICE FROM A THERMAL ENERGY NETWORK IN ACCORDANCE WITH
SECTION 40-4-121 (7).
SECTION 6. In Colorado Revised Statutes, 32-1-1001, add (l)(p)
as follows:
32-1-1001. Common powers -definitions.
(1) For and on behalf of the special district, the board has the
PAGE 7-SENATE BILL 26-142
following powers:
(p) TO ENTER INTO AGREEMENTS WITH ONE OR MORE PARTIES,
INCLUDING OTHER LOCAL GOVERNMENTAL ENTITIES, FOR THE PROVISION OF
SERVICE FROM A THERMAL ENERGY NETWORK IN ACCORDANCE WITH
SECTION 40-4-121 (7) OR 29-1-208.
SECTION 7. In Colorado Revised Statutes, 34-60-106, add (2.5)( c)
as follows:
34-60-106. Additional powers of commission - fees - rules -
definitions -repeal.
(2.5) ( C) IN EXERCISING THE AUTHORITY GRANTED TO THE
COMMISSION PURSUANT TO THIS ARTICLE 60, THE COMMISSION SHALL NOT
CONDITION ANY APPROVAL OF OIL AND GAS OPERATIONS ON AN OPERA TOR
AGREEING TO SUBJECT THE OPERA TOR'S OIL AND GAS WELLS TO THE DAT A
COLLECTION PROGRAM DESCRIBED IN SECTION 37-90.5-112.
SECTION 8. In Colorado Revised Statutes, add 37-90.5-112 as
follows:
37-90.5-112. Geothermal data collection -duties of commission
-gifts, g.-ants, or donations -report -repeal.
(1) (a) THE COMMISSION ANDTHECOLORADOGEOLOGICALSURVEY,
ESTABLISHED IN SECTION 23-41-203, SHALL FACILITATE THE COLLECTION OF
DATA REGARDING GEOTHERMAL RESOURCES IN THE STATE. IN
CONSIDERATION OF AVAILABLE MONEY, THE COMMISSION AND THE
COLORADO GEOLOGICAL SURVEY MAY:
(I) COLLECT DAT A TO INFORM THE ASSESSMENT OR DEVELOPMENT
OF GEOTHERMAL RESOURCES IN THE ST A TE;
(II) CONSIDER THE USE OF OIL AND GAS WELLS SCHEDULED TO BE
PLUGGED AND ABANDONED AS ORPHANED WELLS, AS DEFINED IN SECTION
34-60-133 (8)(f); MARGINAL WELLS, AS DEFINED IN SECTION 34-60-133
(8)( d.5); OR, WITH THE CONSENT OF THE OPERA TOR, OTHER OIL AND GAS
WELLS IDENTIFIED BY AN OIL AND GAS OPERA TOR;
PAGE 8-SENATE BILL 26-142
(Ill) CONSIDER THE USE OF MONITORING AND OBSERVATION WELLS,
AS DEFINED IN SECTION 37-91-102 (10.5); TEST HOLES, AS DEFINED IN
SECTION 37-91-102 (15.7), AUTHORIZED BY THE STATE BOARD OF
EXAMINERS OF WATER WELLAND GROUND HEAT EXCHANGER CONTRACTORS,
CREATED IN SECTION 37-91-103; OR OTHER WELLS, AS DEFINED IN SECTION
3 7-91-102 ( 16), IDENTIFIED BY THE STATE ENGINEER, APPOINTED PURSUANT
TO SECTION 37-80-101;
(IV) ASSESS BOTTOM-HOLE TEMPERA TURES AND THERMAL
GRADIENTS FROM WELLS, AS DESCRIBED IN SUBSECTIONS (l)(a)(II) AND
(l)(a)(III) OF THIS SECTION;
(V) UTILIZE EXISTING INFRASTRUCTURE OR DRILL NEW WELLS FOR
DAT A COLLECTION IF FUNDING IS AVAILABLE;
(VI) PRIORITIZE THE COLLECTION OF BOTTOM-HOLE TEMPERA TURES,
THE MEASUREMENT AND EVALUATION OF THERMAL GRADIENTS, AND THE
COLLECTION OF OTHER RELEVANT DATA THAT WOULD SUPPORT INCREASED
UNDERSTANDING OF AVAILABLE GEOTHERMAL RESOURCES OR THAT COULD
FACILITATE OR INFORM:
(A) THE PRODUCTION OF GEOTHERMAL ENERGY;
(B) DRILLING OF RESERVOIR DEPTH RESOURCE EXPLORATION,
CHARACTERIZATION, OR CONFIRMATION WELLS TO GATHER ADDITIONAL
DATA AND INFORMATION;
(C) FIELD TESTS OR OTHER TESTS AT SITES WITH POTENTIAL FOR
HYDROTHERMAL, NEXT-GENERATION DEVELOPMENT, OR ELECTRIC POWER
GENERATION; OR
(D) THE DEPLOYMENT OF LOW-TEMPERATURE GEOTHERMAL
TECHNOLOGIES FOR HEATING, COOLING, OR OTHER DIRECT USES; AND
(VII) CONSIDER ANY ADDITIONAL RELEVANT DATA OR
INFORMATION, INCLUDING:
(A) DATA RELATED TO RESOURCES IN HOT DRY ROCK;
(8) TEMPERATURE AT DEPTH;
PAGE 9-SENATE BILL 26-142
(C) INFORMATION RELATED TO SUBSURFACE PERMEABILITY AND
FRACTURE NETWORKS;
(D) DATA RELATED TO LOCAL STRESS REGIMES; AND
(E) THERMAL CONDUCTIVITY, THERMAL DIFFUSIVITY, AND
UNDISTURBED GROUND TEMPERATURE.
(b) THE DATA COLLECTION CONDUCTED PURSUANT TO THIS
SUBSECTION ( 1) MUST BE:
(I) CONDUCTED SUBJECT TO PRIVATE PROPERTY RIGHTS;
(II) CONDUCTED WITHOUT COMPELLING THE PUBLIC RELEASE OF
PROPRIETARY DATA WITHOUT THE CONSENT OF THE DATA OWNER;
(Ill) CONDUCTED WITHOUT INCREASING THE RISK OF ADVERSE
IMPACTS TO PUBLIC HEAL TH, SAFETY, AND WELFARE, INCLUDING THE
ENVIRONMENT AND WILDLIFE RESOURCES;
(IV) CONDUCTED VOLUNTARILY WHEN DATA IS PROVIDED BY AN
ENTITY OTHER THAN THE COMMISSION OR THE COLORADO GEOLOGICAL
SURVEY;AND
(V) ORGANIZED IN A SEARCHABLE FORMAT THAT IS MADE
AVAILABLE AT NO COST TO THE PUBLIC.
( c) (I) THE COMMISSION AND THE COLORADO GEOLOGICAL SURVEY
MAY CONTRACT WITH THIRD-PARTY ENTITIES TO CONDUCT THE DATA
COLLECTION PURSUANT TO THIS SUBSECTION ( 1 ).
(11) THE COMMISSION MAY SEEK, ACCEPT, AND EXPEND GIFTS,
GRANTS, OR DONATIONS FROM PRIVATE OR PUBLIC SOURCES FOR THE
PURPOSES OF CONDUCTING THE DATA COLLECTION PURSUANT TO THIS
SUBSECTION (1 ).
(Ill) THE COMMISSION MAY EXPEND ANY MONEY APPROPRIATED BY
THE GENERAL ASSEMBLY FOR THE PURPOSES OF CONDUCTING THE DATA
COLLECTION PURSUANT TO THIS SUBSECTION ( 1 ).
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(d) (I) THE COLLECTION OF DATA CONDUCTED PURSUANT TO THIS
SUBSECTION ( 1) IS CONTINGENT ON AVAILABLE APPROPRIATIONS OR GIFTS,
GRANTS, OR DONATIONS RECEIVED FOR THIS PURPOSE AND DOES NOT IMPAIR
THE COLORADO GEOLOGICAL SURVEY'S OBLIGATION TO FULFILL EXISTING
STATUTORY RESPONSIBILITIES. THECOLORADOGEOLOGICALSURVEYSHALL
NOT REDUCE EXISTING COMMITMENTS OF MONEY MADE BY THE COLORADO
GEOLOGICAL SURVEY FROM THE SEVERANCE TAX OPERATIONAL FUND,
CREATED IN SECTION 39-29-109 (2)(b)(I), OR THE GENERAL FUND TO
CONDUCT THE DATA COLLECTION.
(11) THE COLLECTION OF DATA CONDUCTED PURSUANT TO THIS
SUBSECTION ( 1) IS CONTINGENT ON AVAILABLE APPROPRIATIONS OR GIFTS,
GRANTS, OR DONATIONS RECEIVED FOR THIS PURPOSE AND DOES NOT IMPAIR
THE COMMISSION'S OBLIGATION TO FULFILL EXISTING STATUTORY OR
REGULA TORY RESPONSIBILITIES OR EXISTING PERMITTING AND REGULA TORY
PROGRAMS. THE COMMISSION SHALL NOT REDUCE EXISTING COMMITMENTS
OF MONEY MADE BY THE COMMISSION FROM THE SEVERANCE TAX
OPERATIONAL FUND, CREATED IN SECTION 39-29-109 (2)(b)(I), OR THE
GENERAL FUND TO CONDUCT THE DATA COLLECTION.
(2) (a) THE COMMISSION SHALL DEVELOP RECOMMENDATIONS TO
ENCOURAGE THE SAFE AND EFFECTIVE DEVELOPMENT OF GEOTHERMAL
RESOURCES IN THE ST A TE.
(b) (I) IN DEVELOPING THE RECOMMENDATIONS PURSUANT TO THIS
SUBSECTION (2), THE COMMISSION MAY CONSIDER MEASURES THAT
FACILITATE THE SAFE AND EFFECTIVE DEVELOPMENT OF GEOTHERMAL
RESOURCES, INCLUDING THE CREATION OF A GEOTHERMAL DEVELOPMENT
AUTHORITY.
(II) ANY RECOMMENDED GEOTHERMAL DEVELOPMENT AUTHORITY
MAY BE STRUCTURED TO FACILITATE PUBLIC-PRIVATE PARTNERSHIPS,
SECURE FEDERAL FUNDING, AND PROVIDE FINANCIAL RISK-MITIGATION
MECHANISMS FOR DEEP EXPLORATORY DRILLING AND ASSOCIATED
TRANSMISSION INFRASTRUCTURE OR FOR CONDUCTING THERMAL ENERGY
NETWORK STUDIES OR DEVELOPING A THERMAL ENERGY NETWORK. ANY
RECOMMENDED GEOTHERMAL DEVELOPMENT AUTHORITY MUST BE
NONREGULATORY IN NATURE.
( c) IN DEVELOPING THE RECOMMENDATIONS PURSUANT TO THIS
PAGE 11-SENATE BILL 26-142
SUBSECTION (2), THE COMMISSION SHALL CONSULT WITH:
(I) ST A TE AGENCIES WITH SUBJECT MATTER EXPERTISE RELEVANT TO
THE RECOMMENDATIONS, INCLUDING:
(A) THE COLORADO GEOLOGICAL SURVEY;
(B) THE COLORADO ENERGY OFFICE CREATED IN SECTION
24-38.5-101;
(C) THE DIVISION OF WATER RESOURCES IN THE DEPARTMENT OF
NATURAL RESOURCES; AND
(0) THE COLORADO OFFICE OF ECONOMIC DEVELOPMENT CREA TED
IN SECTION 24-48.5-101;
(II) STAKEHOLDERS WITH TECHNICAL OR ECONOMIC EXPERTISE
REGARDING THE DEVELOPMENT OF GEOTHERMAL RESOURCES, AS
DETERMINED BY THE COMMISSION; AND
(111) ANY OTHER PERSON THE COMMISSION DETERMINES NECESSARY
TO DEVELOP RECOMMENDATIONS FOR THE SAFE AND EFFECTIVE
DEVELOPMENT OF GEOTHERMAL RESOURCES IN THE STATE.
(3) ON OR BEFORE NOVEMBER 15, 2026, THE COMMISSION SHALL
SUBMIT A REPORT THAT SUMMARIZES THE RECOMMENDATIONS DEVELOPED
PURSUANT TO SUBSECTION (2) OF THIS SECTION TO THE HOUSE OF
REPRESENTATIVES ENERGY AND ENVIRONMENT COMMITTEE AND THE
SENATE TRANSPORTATION AND ENERGY COMMITTEE, OR THEIR SUCCESSOR
COMMITTEES.
(4) THIS SUBSECTION (4) AND SUBSECTIONS (2) AND (3) OF THIS
SECTION ARE REPEALED, EFFECTIVE SEPTEMBER 1, 2028.
SECTION 9. In Colorado Revised Statutes, 40-2-127.5, amend
(2)(a)(IV) as follows:
40-2-127.5. Community energy funds - community geothermal
gardens - rules - legislative declaration - definitions - repeal.
PAGE 12-SENATE BILL 26-142
(2) Definitions. As used in this section, unless the context otherwise
requires, the definitions in section 40-2-124 apply, and:
(a) (IV) A community geothermal garden must have a nameplate
rating of five NET ELECTRIC GENERATING CAPACITY OF TWENTY-FIVE
megawatts or less. except that the commission may, in rnlcs adopted
pursuant to subsection (3)(b) of this section, apprnvc the formation of a
community geothermal garden with a nanrcplatc rating of up to ten
megawatts.
SECTION 10. In Colorado Revised Statutes, add 40-2-143 as
follows:
40-2-143. Geothermal energy development - small-scale
geothermal projects - large-scale geothermal projects - commission
duties - labor requirements - rules - definitions.
( 1) Definitions. As USED IN THIS SECTION, UNLESS THE CONTEXT
OTHERWISE REQUIRES:
(a) "INVESTOR-OWNED ELECTRIC UTILITY" OR "UTILITY" MEANS AN
INVESTOR-OWNED UTILITY THAT PROVIDES RETAIL ELECTRIC SERVICE TO
CUSTOMERS IN THE STATE AND IS REGULATED BY THE COMMISSION.
(b) "LARGE-SCALE GEOTHERMAL PROJECT" MEANS A GEOTHERMAL
PROJECT OR GEOTHERMAL PROJECTS IDENTIFIED BY A UTILITY PURSUANT TO
SUBSECTION (3) OF THIS SECTION THAT INDIVIDUALLY OR IN AGGREGATE
PRODUCE MORE THAN TWENTY-FIVE MEGA WA TIS OF NAMEPLATE ELECTRIC
GENERATING CAPACITY.
(c) "NET ELECTRIC GENERATING CAPACITY" MEANS THE MAXIMUM
CONTINUOUS ELECTRICAL OUTPUT, EXPRESSED IN MEGA WA TIS, DELIVERED
TO THE TRANSMISSION OR DISTRIBUTION SYSTEM, EXCLUDING AUXILIARY OR
PARASITIC LOADS REQUIRED FOR ON-SITE PLANT OPERATIONS.
(d) "SMALL-SCALE GEOTHERMAL PROJECT" MEANS A GEOTHERMAL
PROJECT IDENTIFIED BY A UTILITY PURSUANT TO SUBSECTION (2) OF THIS
SECTIONTHATPRODUCESTWENTY-FIVEMEGAWATISORLESSOFNAMEPLATE
ELECTRIC GENERATING CAPACITY.
PAGE 13-SENATE BILL 26-142
(2) Small-scale geothermal projects.
(a) AN INVESTOR-OWNED ELECTRIC UTILITY SHALL IDENTIFY ONE OR
MORE POTENTIAL SMALL-SCALE GEOTHERMAL PROJECTS AT SPECIFIC
LOCATIONS OR AS COMMUNITY GEOTHERMAL GARDENS, AS DEFINED IN
SECTION 40-2-127.5 (2)(a).
(b) WHEN CONSIDERING THE DEVELOPMENT OF SMALL-SCALE
GEOTHERMAL PROJECTS, AN INVESTOR-OWNED ELECTRIC UTILITY SHALL
ISSUE A REQUEST FOR PROPOSALS TO SOLICIT PROPOSALS AND BIDS FOR
DEVELOPMENT OF SMALL-SCALE GEOTHERMAL PROJECTS THAT THE UTILITY
SHALL SUBMIT TO THE COMMISSION IN ACCORDANCE WITH SUBSECTION
(2)(c) OF THIS SECTION.
( c) NO LATER THAN ONE HUNDRED TWENTY DAYS AFTER AN
INVESTOR-OWNED ELECTRIC UTILITY CONCLUDES THE REQUEST FOR
PROPOSALS CONDUCTED IN ACCORDANCE WITH SUBSECTION (2)(b) OF THIS
SECTION, THE INVESTOR-OWNED ELECTRIC UTILITY SHALL SUBMIT AN
APPLICATION TO THE COMMISSION FOR THE DEVELOPMENT OF SMALL-SCALE
GEOTHERMAL PROJECTS IF THE UTILITY RECEIVES A BID IN RESPONSE TO THE
REQUEST FOR PROPOSALS SOLICITED IN ACCORDANCE WITH THIS SUBSECTION
(2), WHICH APPLICATION MUST INCLUDE:
(I) A DESCRIPTION OF THE SMALL-SCALE GEOTHERMAL PROJECT AND
WHETHER IT IS LOCATION SPECIFIC ORA COMMUNITY GEOTHERMAL GARDEN;
(II) THE PROPOSED LOCATION OF THE SMALL-SCALE GEOTHERMAL
PROJECT;
(III) THE AMOUNT OF ELECTRICITY, MEASURED IN
MEGAWATT-HOURS, THAT WILL BE GENERATED FROM THE SMALL-SCALE
GEOTHERMALPROJECT;AND
(IV) AN ESTIMATE OF THE PROJECTED TOT AL CAPITAL COST AND
OPERA TING COST OF THE SMALL-SCALE GEOTHERMAL PROJECT AND THE
IMPACT THAT THE COST WILL HA VE ON THE UTILITY'S CUSTOMERS.
( d) THE COMMISSION SHALL APPROVE, CONDITIONALLY APPROVE,
DENY, OR MODIFY AN INVESTOR-OWNED ELECTRIC UTILITY'S APPLICATION
SUBMITTED PURSUANT TO THIS SUBSECTION (2) WITHIN ONE HUNDRED
PAGE 14-SENATE BILL 26-142
TWENTY DAYS AFTER RECEIVlNG THE APPLICATION, OR WITHIN ONE
HUNDRED EIGHTY DAYS AFTER RECEIVING THE APPLICATION, FOR GOOD
CAUSE SHOWN.
( e) IN EVALUATING A SMALL-SCALE GEOTHERMAL PROJECT BID OR
PROPOSAL, THE COMMISSION SHALL EVALUATE THE BID OR PROPOSAL
SUBMITTED BY AN INVESTOR-OWNED ELECTRIC UTILITY BASED ON FACTORS
THAT INCLUDE:
(I) THE PROJECTED TOTAL CAPITAL AND OPERATING COST OF THE
SMALL-SCALE GEOTHERMAL PROJECT AND THE PROJECT'S IMPACT ON
RATEPAYERS IS REASONABLE IN CONSIDERATION OF GREENHOUSE GAS
EMISSION REDUCTIONS AND OTHER RELEVANT BENEFITS, INCLUDING
RESOURCE ADEQUACY NEEDS, LONG-TERM CAPACITY ACCREDITATION, THE
NEED FOR CLEAN FIRM GENERATION RESOURCES, AND ACHIEVING ST A TE
ENERGY POLICY GOALS, AS DETERMINED BY THE COMMISSION; AND
(II) THE DEVELOPMENT OF THE SMALL-SCALE GEOTHERMAL PROJECT
IS IN THE PUBLIC INTEREST.
(f) AS PART OF AN APPLICATION SUBMITTED TO THE COMMISSION
PURSUANT TO THIS SUBSECTION (2), THE INVESTOR-OWNED ELECTRIC
UTILITY SHALL REQUEST, AS APPROPRIATE:
(I) A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY;
(II) APPROVAL FOR ANY PROCUREMENT AGREEMENTS AND
ASSOCIATED COST RECOVERY BY THE INVESTOR-OWNED ELECTRIC UTILITY;
AND
(Ill) APPROVAL OF A RETURN ON INVESTED CAPITAL RECOVERY
APPROACH FOR ANY USED AND USEFUL PROJECT OWNED BY THE
INVESTOR-OWNED ELECTRIC UTILITY THAT IS DEVELOPED IN ACCORDANCE
WITH THIS SECTION.
(3) Large-scale geothermal projects.
(a) (I) WHEN CONSIDERING THE DEVELOPMENT OF LARGE-SCALE
GEOTHERMAL PROJECTS, AN INVESTOR-OWNED ELECTRIC UTILITY SHALL
ISSUE A REQUEST FOR PROPOSALS TO SOLICIT PROPOSALS AND BIDS FOR
PAGE 15-SENATE BILL 26-142
DEVELOPMENT OF LARGE-SCALE GEOTHERMAL PROJECTS THAT THE UTILITY
SHALL SUBMIT TO THE COMMISSION IN ACCORDANCE WITH SUBSECTION
(3 )(b) OF THIS SECTION.
(II) WHEN SOLICITING A REQUEST FOR PROPOSALS IN ACCORDANCE
WITH THIS SUBSECTION (3)(a), THE INVESTOR-OWNED ELECTRIC UTILITY
SHALL TARGET THE ACQUISITION OR DEVELOPMENT OF NO MORE THAN
THREE HUNDRED MEGA WA ITS OF NAMEPLATE ELECTRIC GENERA TING
CAPACITY FROM LARGE-SCALE GEOTHERMAL PROJECTS.
(b) NO LATER THAN ONE HUNDRED TWENTY DAYS AFTER AN
INVESTOR-OWNED ELECTRIC UTILITY CONCLUDES THE REQUEST FOR
PROPOSALS CONDUCTED IN ACCORDANCE WITH SUBSECTION (3)(a) OF THIS
SECTION, THE INVESTOR-OWNED ELECTRIC UTILITY SHALL SUBMIT AN
APPLICATION TO THE COMMISSION FOR THE DEVELOPMENT OF LARGE-SCALE
GEOTHERMAL PROJECTS IF THE UTILITY RECEIVES A BID IN RESPONSE TO THE
REQUEST FOR PROPOSALS SOLICITED IN ACCORDANCE WITH THIS SUBSECTION
(3), WHICH APPLICATION MUST INCLUDE:
(I) A DESCRIPTION OF THE LARGE-SCALE GEOTHERMAL PROJECT AND
WHETHER IT IS A SINGLE PROJECT OR AN AGGREGATE OF MULTIPLE
GEOTHERMAL PROJECTS;
(II) THE PROPOSED LOCATION OR LOCATIONS OF THE LARGE-SCALE
GEOTHERMAL PROJECT;
(III) THE TOTAL AMOUNT OF ELECTRICITY, MEASURED IN
MEGAWATT-HOURS, THAT WILL BE GENERATED FROM THE LARGE-SCALE
GEOTHERMAL PROJECT AND THE ACCREDITED CAPACITY ASSOCIATED WITH
THE PROJECT OR PROJECTS;
(IV) AN ESTIMATE OF THE PROJECTED TOTAL CAPITAL COST AND
OPERA TING COST OF THE LARGE-SCALE GEOTHERMAL PROJECT AND THE
IMPACT THAT THE COST WILL HA VE ON THE UTILITY'S CUSTOMERS;
(V) THE PROPOSED OWNERSHIP STRUCTURE FOR THE LARGE-SCALE
GEOTHERMAL PROJECTS, WHICH MAY INCLUDE FULL OR PARTIAL BUILD
TRANSFER OWNERSHIP STRUCTURES, JOINT VENTURES, OR INDEPENDENT
POWER PRODUCTION OWNERSHIP STRUCTURES WITH A POWER PURCHASE
AGREEMENT; AND
PAGE 16-SENATE BILL 26-142
(VI) A DESCRIPTION OF ANY SPECIFIC CUSTOMER OR GROUP OF
CUSTOMERS THAT THE INVESTOR-OWNED ELECTRIC UTILITY MAY PARTNER
WITH TO SUPPORT THE DEVELOPMENT OF A LARGE-SCALE GEOTHERMAL
PROJECT IN ACCORDANCE WITH SUBSECTION (3)(d) OF THIS SECTION.
( C) THE COMMISSION SHALL APPROVE, CONDITIONALLY APPROVE,
DENY, OR MODIFY AN INVESTOR-OWNED ELECTRIC UTILITY'S APPLICATION
SUBMITTED PURSUANT TO THIS SUBSECTION (3) WITHIN ONE HUNDRED
TWENTY DAYS AFTER RECEIVING THE APPLICATION, OR WITHIN ONE
HUNDRED EIGHTY DAYS AFTER RECEIVING THE APPLICATION, FOR GOOD
CAUSE SHOWN.
( d) IN EVALUATING A LARGE-SCALE GEOTHERMAL PROJECT BID OR
PROPOSAL, THE COMMISSION SHALL EVALUATE THE BID OR PROPOSAL
SUBMITTED BY AN INVESTOR-OWNED ELECTRIC UTILITY BASED ON WHETHER:
(I) THE PROJECTED TOT AL CAP IT AL AND OPERA TING COST OF THE
LARGE-SCALE GEOTHERMAL PROJECT AND THE PROJECT'S IMPACT ON
RATEPAYERS IS REASONABLE IN CONSIDERATION OF RELIABILITY,
GREENHOUSE GAS EMISSION REDUCTIONS, AND OTHER RELEVANT BENEFITS,
INCLUDING RESOURCE ADEQUACY NEEDS, LONG-TERM CAPACITY
ACCREDITATION, THE NEED FOR CLEAN FIRM GENERATION RESOURCES TO
MAKE PROGRESS TOWARD THE ECONOMY-WIDE GOAL OF NET-ZERO
EMISSIONS BY 2050, AND ACHIEVING STATE ENERGY POLICY GOALS, AS
DETERMINED BY THE COMMISSION; AND
(II) THE DEVELOPMENT OF THE LARGE-SCALE GEOTHERMAL PROJECT
IS IN THE PUBLIC INTEREST.
(e) As PART OF AN APPLICATION SUBMITTED TO THE COMMISSION
PURSUANT TO THIS SUBSECTION (3), THE INVESTOR-OWNED ELECTRIC
UTILITY MAY REQUEST, TO THE EXTENT NECESSARY:
(I) A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY;
(II) APPROVAL FOR ANY PROCUREMENT AGREEMENTS AND
ASSOCIATED COST RECOVERY BY THE INVESTOR-OWNED ELECTRIC UTILITY;
AND
(Ill) APPROVAL OF A RETURN ON INVESTED CAPITAL RECOVERY
PAGE 17-SENATE BILL 26-142
APPROACH FOR ANY PROJECT OWNED BY THE INVESTOR-OWNED ELECTRIC
UTILITY THAT IS DEVELOPED IN ACCORDANCE WITH THIS SECTION.
(f) AN INVESTOR-OWNED ELECTRIC UTILITY MAY ONLY SUBMIT ONE
APPLICATION TO THE COMMISSION PURSUANT TO THIS SUBSECTION (3). AN
INVESTOR-OWNED ELECTRIC UTILITY SHALL USE THE EXPERIENCE FROM
CONDUCTING THE SOLICITATION AND SUBMITTING AN APPLICATION
PURSUANT TO THIS SUBSECTION (3) TO INFORM THE UTILITY'S APPROACH IN
FUTURE ELECTRIC RESOURCE PLAN PROCEEDINGS RELATED TO GEOTHERMAL
ENERGY DEVELOPMENT AND OTHER CLEAN FIRM TECHNOLOGIES.
(4) Labor requirements. A SMALL-SCALE GEOTHERMAL PROJECT
OR A LARGE-SCALE GEOTHERMAL PROJECT AUTHORIZED PURSUANT TO THIS
SECTION THAT IS CONSIDERED AN ENERGY SECTOR PUBLIC WORKS PROJECT,
AS DEFINED IN SECTION 24-92-303 ( 5), MUST COMPLY WITH:
(a) THE PREVAILING WAGE REQUIREMENTS IN PART2 OF ARTICLE 92
OF TITLE 24;
(b) THE APPRENTICESHIP UTILIZATION REQUIREMENTS IN SECTION
24-92-115 (7); AND
( c) THE LABOR REQUIREMENTS IN PART 3 OF ARTICLE 92 OF TITLE 24.
(5) Rules. THE COMMISSION MAY ADOPT ANY RULES NECESSARY TO
IMPLEMENT AND ENFORCE THIS SECTION.
SECTION 11. In Colorado Revised Statutes, 40-4-121, add (l)(e.5)
and (7) as follows:
40-4-121. Thermal energy network projects -pilot program for
large gas utilities - application - commission proceeding - reporting -
thermal energy network for local governments -definitions.
( 1) As used in this section, unless the context otherwise requires:
(e.5) "SPECIAL DISTRICT" HAS THE MEANING SET FORTH IN SECTION
32-1-103 (20).
(7) A LOCAL GOVERNMENT OR A SPECIAL DISTRICT MAY AGGREGATE
PAGE 18-SENATE BILL 26-142
THERMAL ENERGY DEMAND FOR THE PURPOSE OF FACILITATING SERVICE
FROM A THERMAL ENERGY NETWORK IN ACCORDANCE WITH SECTION
29-1-208.
SECTION 12. Act subject to petition - effective date. This act
takes effect at 12:01 a.m. on the day following the expiration of the
ninety-day period after final adjournment of the general assembly (August
12, 2026, if adjournment sine die is on May 13, 2026); except that, if a
referendum petition is filed pursuant to section 1 (3) of article V of the state
constitution against this act or an item, section, or part of this act within
such period, then the act, item, section, or part will not take effect unless
PAGE 19-SENATE BILL 26-142
approved by the people at the general election to be held in November 2026
and, in such case, will take effect on the date of the official declaration of
the vote thereon by the governor.
James Rashad Coleman, Sr.
PRESIDENT OF
THE SENATE
Es r van Mourik
SECRETARY OF
THE SENATE
SPEAKER OF THE HOUSE
OF REPRESENTATIVES
v~ tfkid12,y
CHIEF CLERK OF THE HOUSE
OF REPRESENTATIVES
APPROVED oh VY\oV\JP.J "Zl\Jlt'L:: L;--4 2.o~ ~ \ l :4 ~O\(h
a e and Time)
PAGE 20-SENATE BILL 26-142