4 Colo. Code Regs. § 723-4-4731

Current through Register Vol. 47, No. 22, November 25, 2024

Section 4 CCR 723-4-4731 - Clean Heat Plan Application Requirements

(a) Initial forecasts.

(I) A utility shall present reference (base), low and high forecasts of sales, customer counts, system-wide capacity (design peak demand) requirements, throughput by Btus and volumes of green hydrogen, recovered methane, and total gas, and system-wide greenhouse gas emissions.

(A) All forecast elements shall be provided for the total utility and by customer class, for each year of the clean heat plan action period and in five-year increments during the clean heat plan informational period.

(B) Forecasts should be disaggregated by pressure district, unique planning zones requiring a distinct design peak demand condition, or other geographical segmentation, as appropriate.

(C) The utility shall fully explain, justify, and document the data, assumptions, methodologies, models, determinants, and any other inputs upon which it relied to develop forecasts pursuant to this rule.

(D) The greenhouse gas emissions forecast should be based on the latest Commission-approved workbook developed by the Air Pollution Control Division, consistent with paragraph 4527(a), updated for the most recent calendar year of data, and include the factors identified in below in subparagraph (E).

(E) Forecast(s) shall include consideration of the following factors, to the extent practicable and applicable:

(i) the effect of current and enacted state and local building codes;

(ii) changes in line extension policies, and the associated potential impact on gas customer growth, in the aggregate;

(iii) building electrification programs or incentives offered by the local electric utility or local or federal entities that overlap with a utility's gas service territory;

(iv) the price elasticity of demand; and

(v) other known factors affecting sales and gas supply capacity needs.

(F) Low and high forecasts shall incorporate alternative projections of customer growth and sales, and any underlying supporting assumptions, to assess a reasonable range of variation surrounding the reference (base) forecast.

(b) Portfolios.

(I) A utility shall present the following portfolios of clean heat resources:

(A) at least one portfolio shall use the maximum amount of clean heat resources practicable and also comply with a 2.5 percent annual retail cost impact cap; This portfolio may or may not meet the clean heat target in the applicable plan period, but must demonstrate reductions in methane emissions;

(B) at least one portfolio shall meet the clean heat target regardless of the annual retail cost impact of such portfolio;

(C) the utility may present other alternative portfolios;

(D) the Commission may direct the utility to present additional alternative portfolios; and

(E) the utility shall identify a preferred portfolio that best balances, given the information available, the goals of maintaining just and reasonable rates, maintaining system safety, reliability and resiliency, protecting disproportionately impacted communities, the labor standards identified below in subparagraph (d)(II)(F), and contribution to statewide progress on meeting the greenhouse gas emission reduction goals established in § 25-7-102(2)(g), C.R.S., and the associated clean heat targets in rule 4728.

(II) If a utility is unable to present portfolios that show compliance with the cost cap or compliance with the clean heat target, as described above, the utility must show that it has fully investigated all available categories of clean heat resources.

(c) Portfolio forecasts.

(I) For each portfolio presented, the utility shall provide the forecasts identified above in subparagraph (a)(I), updated to include the set of actions proposed in the respective portfolio for each year of the clean heat plan action period and every fifth year during the clean heat plan informational period.

(d) Components of a portfolio.

(I) For each portfolio presented, the utility shall provide, on a portfolio basis:

(A) identification of the proposed clean heat resources;

(B) the annual and total cost for implementing the portfolio;

(C) the annual and total cost for implementing the portfolio in income-qualified or disproportionately impacted communities;

(D) the annual and cumulative projected greenhouse gas emissions and reduction in emissions from the baseline emission level calculated pursuant to rules 4525 through 4528;

(E) an analysis of the projected costs and benefits of the portfolio:

(i) the cost-benefit analysis shall include but not be limited to:

(1) fuel costs;

(2) non-fuel direct investment associated with the clean heat plan;

(3) gas infrastructure costs;

(4) gas system operations costs; and

(5) the social cost of carbon and the social cost of methane, consistent with rule 4528.

(F) an analysis of the annual retail cost impact, which shall be calculated:

(i) net of the utility's approved gas demand side management program budgets, except for the costs of any incentive adopted or approved by the Commission associated with the utility's demand side management programs; and

(ii) net of the utility's approved beneficial electrification plan program budget if the clean heat plan application includes a request for approval of a beneficial electrification plan.

(G) a description of the effects of the proposed actions and investments in the portfolio on the safety, reliability, and resilience of the utility's gas service.

(II) For each portfolio presented, the utility shall provide and shall quantify, as practicable, on a clean heat resource category basis:

(A) the annual and total cost for each clean heat resource category;

(B) identification of any additional air quality, environmental, and health benefits of each clean heat resource category in addition to the greenhouse gas emission reductions;

(C) the proportion of projects or programs that benefit disproportionately impacted communities, or customers who meet the requirements for income-qualified programs;

(D) a reasonable estimate of the labor costs associated with development of the clean heat resources in each category that reflect compliance with all applicable labor standards set forth in § 40-3.2-105.5, C.R.S., net of avoided capital infrastructure costs; and

(F) an explanation of whether the portfolio incorporates projects addressed by § 40-3.2-108(8)(d), C.R.S., and how it satisfies the labor standards under § 40-3.2105.5, C.R.S., to the extent applicable. The utility shall also develop and provide an estimate of the number of gas distribution jobs that may be affected by each clean heat plan portfolio and the pay and benefit levels of those jobs.

(e) Green hydrogen.

(I) If one or more proposed portfolios include green hydrogen as a clean heat resource, the utility shall present an analysis demonstrating its distribution system can safely carry the expected concentrations and volumes of hydrogen, including the age and material of pipe, fittings, and other relevant infrastructure, in the locations of the system where the green hydrogen is intended to be introduced and transported. The utility should also present a plan to monitor and verify the impact of injecting and transporting hydrogen over time to ensure the continued safety and reliability of the system.

(f) Project-based information.

(I) It is the Commission's policy that utilities should acquire clean heat resources in the most cost-effective manner. To this end, the utility shall use competitive solicitations to the maximum extent practical.

(A) If a utility's clean heat plan includes the purchase or development of green hydrogen, the utility must include the gross quantity of green hydrogen transported by a common carrier or dedicated pipeline on an annual basis and the corresponding Btu content.

(B) With the exception of a green hydrogen project proposed in coordination with the State of Colorado, to secure benefits under a federal law, or as part of a State of Colorado application for a hydrogen hub, a proposal for a green hydrogen project shall include a competitive solicitation proposal, which shall include, at minimum, the following information:

(1) a copy of the request for proposals to be offered in the competitive solicitation;

(2) an explanation of required milestones and development-related penalties;

(3) the timing of the competitive solicitation and review and negotiation processes;

(4) a copy of the proposed contract to be signed by the utility and any third-party entity;

(5) the utility's standards for interconnection, including purity standards and metering methods; and

(6) an explanation of how best value employment metrics, as defined in paragraph 4001(j), will be evaluated in the utility's review of bids.

(II) For all proposed projects, the utility shall identify any developer or operator, if not the utility, and any customers on whose property the investment will be placed.

(III) The utility shall provide a map of disproportionately impacted communities located within the utility's service territory. The map must show the location of any anticipated green hydrogen or recovered methane projects and identify any portions of the project that are located in disproportionately impacted communities.

(g) Cost recovery proposals.

(I) The utility may propose a rate adjustment clause or structure that provides for recovery of the utility's clean heat plan costs, or any costs incurred to meet additional emission reduction requirements under § 25-7-105(1)(e) (X.7), C.R.S.

(II) The utility shall identify any potential changes to depreciation schedules or other actions to align the utility's cost recovery with statewide policy goals, including reducing greenhouse gas emissions, minimizing costs, and minimizing risks to customers.

4 CCR 723-4-4731

47 CR 08, April 25, 2024, effective 5/15/2024