Full Text of the Colorado
Renewable Energy Initiative

Be
it Enacted by the People of the State of Colorado :

SECTION
1. Legislative declaration of intent:

Energy is critically
important to Colorado’s welfare and development, and its use has a profound
impact on the economy and environment. Growth of the state’s population
and economic base will continue to create a need for new energy resources,
and Colorado ’s renewable energy resources are currently underutilized.

Therefore, in order
to save consumers and businesses money, attract new businesses and jobs,
promote development of rural economies, minimize water use for electricity
generation, diversify Colorado’s energy resources, reduce the impact of
volatile fuel prices, and improve the natural environment of the state,
it is in the best interests of the citizens of Colorado to develop and utilize
renewable energy resources to the maximum practicable extent.

SECTION 2.
Article 2 of title 40, Colorado Revised Statutes, is amended BY
THE ADDITION OF THE FOLLOWING NEW SECTIONS to read:

ARTICLE 2

Renewable Energy Standard

40-2-124. Renewable
Energy Standard. (1) Each provider of retail electric service
in the State of Colorado that serves over 40,000 customers shall be considered
a qualifying retail utility and shall be subject to the rules established
under this article by the Public Utilities Commission of the State of Colorado
(Commission). No additional regulatory authority of the Commission other
than that specifically contained herein is provided or implied. In accordance
with Article 4 of Title 24, C.R.S., on or before April 1, 2005 , the Commission
shall initiate one or more rulemaking processes to establish the following:

(a) Definitions of
eligible renewable energy resources that can be used to meet the standards.
Eligible renewable energy resources are solar, wind , geothermal, biomass,
and hydroelectricity with a nameplate rating of 10 megawatts or less. The
commission shall determine, following an evidentiary hearing, the extent
that such electric generation technologies utilized in an optional pricing
program may be used to comply with this standard. A fuel cell using hydrogen
derived from these eligible resources is also an eligible electric generation
technology. Fossil and nuclear fuels and their derivatives are not eligible
resources. Further, "biomass" shall be defined to mean:

(I) nontoxic plant
matter that is the byproduct of agricultural crops, urban wood waste, mill
residue, slash, or brush;

(II) animal wastes
and products of animal wastes; or

( III ) methane produced
at landfills or as a by-product of the treatment of wastewater residuals.

(b) Standards for the
design, placement, and management of electric generation technologies that
use eligible renewable energy resources to ensure that the environmental
impacts of such facilities are minimized.

(c) (I) Electric resource
standards for renewable energy resources. The electric resource standard
shall require each qualifying retail utility to generate, or cause to be
generated, electricity from eligible renewable energy resources in the following
minimum amounts:

(A) 3% of its retail
electricity sales in Colorado for the years 2007 through 2010;

(B) 6% of its retail
electricity sales in Colorado for the years 2011 through 2014;

(C) 10% of its retail
electricity sales in Colorado for the years 2015 and thereafter.

(II) Of the amounts
in subpart (C)(I), at least 4% shall be derived from solar electric generation
technologies . At least one -half of this 4% shall be derived from solar
electric technologies located on- site at customers’ facilities.

( III ) Each kilowatt-hour
of renewable electricity generated in Colorado shall be counted as 1.25
kilowatt-hours for the purposes of compliance with this standard.

(IV) To the extent
that the ability of a qualifying retail utility to acquire eligible renewable
electric generation is limited by a requirements contract with a wholesale
electric supplier, the qualifying retail utility shall acquire the maximum
amount allowed by the contract. For any shortfalls to the amounts established
by the Commission pursuant to part (C)(I), the qualifying retail utility
shall acquire an equivalent amount of either (i) renewable energy credits,
(ii) documented and verified energy savings through energy efficiency and
conservation programs, or ( iii ) a combination of both. Any contract entered
into by a qualifying retail utility after the effective date of this article
shall not conflict with this article.

(d) A system of tradable
renewable energy credits that may be used by a qualifying retail utility
to comply with this standard. The Commission shall also analyze the effectiveness
of utilizing any regional system of renewable energy credits in existence
at the time of its rulemaking process and determine if the system is governed
by rules that are consistent with the rules established for this article.

(e) A standard rebate
offer program. Each qualifying retail utility shall make available to its
retail electricity customers a standard rebate offer of a minimum of $2.00
per watt for the installation of eligible solar electric generation on customers’
premises up to a maximum of one -hundred kilowatts per installation. Such
offer shall allow customer’s retail electricity consumption to be
offset by the solar electricity generated. To the extent that solar electricity
generation exceeds the customer’s consumption during a billing month,
such excess electricity shall be carried forward as a credit to the following
month’s consumption. To the extent that solar electricity generation
exceeds the customer’s consumption during a calendar year, the customer
shall be reimbursed by the qualifying retail utility at its average hourly
incremental cost of electricity supply over the prior twelve month period.
The qualifying retail utility shall not apply unreasonably burdensome interconnection
requirements in connection with this standard rebate offer. Electricity
generated under this program shall be eligible for the qualifying retail
utility’s compliance with this article.

(f) Policies for the
recovery of costs incurred with respect to these standards for qualifying
retail utilities that are subject to rate regulation by the commission.
Such policies shall include:

(I) Allowing qualifying
retail utilities to earn an extra profit on their investment in renewable
energy technologies if these investments provide net economic benefits to
customers as determined by the commission. The allowable extra profit in
any year shall be the qualifying retail utility’s most recent commission
authorized rate of return plus a bonus limited to 50% of the net economic
benefit.

(II) Allowing qualifying
retail utilities to earn their most recent commission authorized rate of
return, but no bonus, on investments in renewable energy technologies if
these investments do not provide a net economic benefit to customers.

( III ) If the commission
approves the terms and conditions of a renewable energy contract between
the qualifying retail utility and another party, the renewable energy contract
and its terms and conditions shall be deemed to be a prudent investment,
and the commission shall approve retail rates sufficient to recover all
just and reasonable costs associated with the contract. All contracts for
acquisition of eligible renewable electricity shall have a minimum term
of 20 years. All contracts for the acquisition of renewable energy credits
from solar electric technologies located on site at customer facilities
shall also have a minimum term of twenty years.

(IV) a requirement
that qualifying retail utilities consider proposals offered by third parties
for the sale of renewable energy and / or renewable energy credits. The
commission may develop standard terms for the submission of such proposals.

(g) Retail rate impact
rule. The commission shall annually establish a maximum retail rate impact
for this section of 50 cents ($0.50) per month for the average residential
customer of a qualifying retail utility. The retail rate impact shall be
determined net of new non-renewable alternative sources of electricity supply
reasonably available at the time of the determination.

(h) Annual reports.
Each qualifying retail utility shall submit to the commission an annual
report that provides information relating to the actions taken to comply
with this article including the costs and benefits of expenditures for renewable
energy. The report shall be within the time prescribed and in a format approved
by the commission.

(i) R ules necessary
for the administration of this article including enforcement mechanisms
necessary to ensure that each qualifying retail utility complies with this
standard; and provisions governing the imposition of administrative penalties
assessed after a hearing held by the commission pursuant to section 40-6-109.
Under no circumstances shall the costs of administrative penalties be recovered
from Colorado retail customers.

(2) The Commission
shall establish all rules called for in subsections (a) through (g) of this
section by March 31, 2006 .

(3) If a municipally
owned electric utility or a rural electric cooperative implements a renewable
energy standard substantially similar to this section 40-2-124, then the
governing body of the municipally owned electric utility or rural electric
cooperative may self-certify its renewable energy standard and upon self-certification
will have no obligations under this article. The municipally owned utility
or cooperative shall submit a statement to the commission that demonstrates
such utility or cooperative has a substantially similar renewable energy
standard. In order for such utility or cooperative to self-certify, such
renewable energy standard shall, at a minimum, meet the following criteria:

(a) The eligible renewable
energy resources must be limited to those identified in subsection 40-2-124(1)(a),

(b) The percentage
requirements must be equal to or greater in the same years than those identified
in subsection 40-2-124(1)(C)(I), and

(c) The utility must
have an optional pricing program in effect that allows retail customers
the option to support through utility rates emerging renewable energy technologies.

(4) Procedure for exemption
and inclusion – election.

(a) The
board of directors of each qualifying retail utility subject to section
40-2-124 may , at its option, submit the question of its exemption from
section 40-2-124 CRS , to its consumers on a one meter equals one vote basis.
Approval by a majority of those voting in the election shall be required
for such exemption, providing that a minimum of 25% of eligible consumers
participates in the election.

(b) The board of directors
of each municipally owned electric utility or rural electric cooperative
not subject to section 40-2-124 may , at its option, submit the question
of its inclusion in section 40-2-124 CRS , to its consumers on a one meter
equals one vote basis. Approval by a majority of those voting in the election
shall be required for such inclusion, providing that a minimum of 25% of
eligible consumers participates in the election.

40-2-125 Eminent
Domain Restrictions. A qualifying retail utility shall not have
the authority to condemn or exercise the power of eminent domain over any
real estate, right-of-way, easement, or other right pursuant to section
38-2-101, C.R.S., to site the generation facilities of a renewable energy
system used in whole or in part to meet the electric resource standards
set forth in section 40-2-124.