HB 1225

HOUSE BILL 26-1225
BY REPRESENTATIVE(S) Smith and Willford, Bacon, Brown, Duran,
English, Froelich, Goldstein, Jackson, Joseph, Lindsay, McCormick,
Nguyen, Paschal, Ricks, Sirota, Camacho, McCluskie;
also SENATOR(S) Ball and Bright, Bridges, Cutter, Kipp, Lindstedt,
Marchman, Coleman.
CONCERNING REQUIREMENTS TO FOSTER DISTRIBUTED ENERGY RESOURCES
        IN THE STA TE.
Be it enacted by the General Assembly of the State of Colorado:
     SECTION 1. Short title. The short title of this act is the
"Advancing Grid Resilience Using Distributed Energy Resources Act".
       SECTION 2. Legislative declaration. ( 1) The general assembly
finds and declares that:
        (a) Demand for electricity is rapidly increasing, and the ability of
electric utilities to affordably satisfy demand while preserving reliability is
increasingly important;
        (b)    Distributed energy resources, including community solar,
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.
dispatchable distributed generation, and distributed energy storage, play an
important role in satisfying increasing electricity demand in a reliable and
affordable manner;
       (c) Since 2011, the state has consistently encouraged the deployment
of community solar gardens to ensure that Coloradans without access to
onsite generation can participate in distributed energy programs and that
ratepayers with low incomes, in particular, can benefit from bill credits that
reduce monthly utility bills;
       (d)    Dispatchable distributed generation facilities, including
resources paired with energy storage, are increasingly recognized as
cost-effective resources that support grid reliability and resilience;
       (e) State policy has supported the development of distributed energy
resources as part of a diversified and resilient electric grid, while federal
policy changes have created uncertainty for certain resource types;
       (f) The enactment of H.R. 1 of the 119th Congress (2025-2026),
Pub.L. 119-21, in 2025 modified federal tax incentives for certain electricity
generation resources, creating new market conditions that affect the
deployment of distributed energy resources;
       (g) Certain federal tax credits applicable to distributed energy
resource projects are scheduled to phase out or expire beginning in 2029,
depending on project completion timelines;
       (h) Federal tax policy has historically played a role in enabling
cost-effective deployment of distributed energy resources;
         (i) Community solar and dispatchable distributed generation
facilities require multiple years to design, finance, permit, and interconnect
to the electric grid;
       U) The interconnection process can take multiple years, delaying
deployment of needed distributed energy resources and increasing project
costs;
       (k) A significant portion of project time lines is attributable to utility
interconnection studies and necessary system upgrades required for safe and
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reliable integration;
       (I) Policies and processes that facilitate more timely and
cost-effective interconnection can accelerate deployment of distributed
energy resources and enhance grid reliability and affordability;
       (m) Maintaining the value of bill credits for subscribers to
distributed energy resource programs, particularly for ratepayers with low
incomes, is important amid rising cost pressures; and
        (n) Adjustments to state policy are necessary to ensure that
distributed energy resource programs continue to provide benefits to the
electric grid and to ratepayers under evolving federal and market conditions.
       (2) Therefore, it is the intent of the general assembly to:
        (a) Make adjustments to state law to facilitate the timely and
cost-effective deployment of distributed energy resources while maintaining
the value of such resources for community solar subscribers and particularly
for ratepayers with low incomes; and
       (b) Ensure that processes designed to accelerate interconnection
protect communities and workers.
        SECTION 3. In Colorado Revised Statutes, 40-2-127, add
(2)(b )(I.5) and ( 5)(b )(II)(J) as follows:
       40-2-127. Community energy funds - community solar gardens
- definitions - rules - legislative declaration - applicability - repeal.
      (2) Definitions. As used in this section, unless the context otherwise
reqmres:
       (b) In addition:
       (l.5) "INCOME-QUALIFIED SUBSCRIBER" HASTHEMEANINGSETFORTH
IN SECTION 40-2-127.2 (l)(f).
       (5) Purchases of the output from community solar gardens.
PAGE 3-HOUSE BILL 26-1225
       (b)   (II) (J)   ON AND AFTER OCTOBER 1, 2026, A SUBSCRIBER
ORGANIZATION MAY DIRECT THE QUALIFYING RETAIL UTILITY TO PROVIDE
THE SUBSCRIBER ORGANIZATION'S INCOME-QUALIFIED SUBSCRIBERS WITH A
FIXED BILL CREDIT PURSUANT TO SUBSECTION ( 5)(b )(II)( C) OF THIS SECTION
AND TO PROVIDE THE SUBSCRIBER ORGANIZATION'S OTHER SUBSCRIBERS
WITH A BILL CREDIT THAT CHANGES ANNUALLY PURSUANT TO SUBSECTION
(5)(b)(Il)(B) OF THIS SECTION. THE QUALIFYING RETAIL UTILITY SHALL
ADJUST THE VALUE OF THE FIXED BILL CREDIT AVAILABLE TO AN
INCOME-QUALIFIED SUBSCRIBER BY ADJUSTING THE FIXED BILL CREDIT
ANNUALLY TO ENSURE THAT THE CREDIT REMAINS ALIGNED WITH CHANGES
IN ELECTRICITY RATES OVER TIME. THE SUBSCRIBER ORGANIZATION SHALL
CHOOSE THE INITIAL VALUE OF THE FIXED BILL CREDIT FOR AN
INCOME-QUALIFIED SUBSCRIBER FROM ANY OF THE PREVIOUS THREE YEARS.
THE INITIAL VALUE APPLIES FOR AN INITIAL PERIOD OF TIME, AS DETERMINED
BY THE COMMISSION. AFTER THE INITIAL PERIOD, THE CREDIT SHALL BE
ADJUSTED ANNUALLY IN A MANNER DETERMINED BY THE COMMISSION.
      SECTION 4. In Colorado Revised Statutes, 40-2-135, amend (6);
and add (7) and (8) as follows:
      40-2-135. Retail distributed generation - customers' rights -
working group - accelerated interconnection - rules - penalties.
       (6) (a) A public utility may recover its prudently incurred costs to
facilitate a timely interconnection, which costs may include the cost of
equipment that the public utility procures for future upgrades needed to
interconnect retail distributed generation resources. A public utility may
recover the costs of any such equipment inventory as capital work in
progress if the inventory is projected to be used within five years of AFTER
its procurement and with a return at the most recently authorized weighted
average cost of capital.
       (b) A PUBLIC UTILITY SHALL NOT REQUIRE AN INTERCONNECTION
CUSTOMER TO PAY THE COSTS ASSOCIATED WITH REASONABLE AND
NECESSARY INTERCONNECTION FACILITIES AND UPGRADES UNTIL THIRTY
DAYS BEFORE THE PUBLIC UTILITY INCURS THE COSTS. A PUBLIC UTILITY
MAY REQUIRE AN INTERCONNECTION CUSTOMER TO PROVIDE SECURITY FOR
THE ESTIMATED FULL COSTS OF INTERCONNECTION AT THE TIME BOTH
PARTIES EXECUTE AN INTERCONNECTION AGREEMENT. A PUBLIC UTILITY
SHALL PROVIDE SECURITY OPTIONS TO THE INTERCONNECTION CUSTOMER,
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INCLUDING ACCEPTANCE OF A LETTER OF CREDIT FROM A QUALIFIED
PROVIDER.
       (7) (a) ON OR BEFORE AUGUST 15, 2026, A PUBLIC UTILITY WITH
MORE THAN FIVE HUNDRED THOUSAND CUSTOMERS IN THE STATE SHALL
CONVENE A WORKING GROUP TO ACCELERATE DISTRIBUTED GENERATION
INTERCONNECTION. THE WORKING GROUP MUST INCLUDE STAKEHOLDERS
FROM THE PUBLIC UTILITY, STAFF OF THE COMMISSION, THE OFFICE OF THE
UTILITY CONSUMER ADVOCATE CREATED IN SECTION 40-6.5-102, TRADE
ASSOCIATIONS, AND PROJECT DEVELOPERS.
       (b) THE WORKING GROUP SHALL:
       (I) DISCUSS, IF APPLICABLE:
       (A) A CLUSTER AND BATCH STUDY PROCESS FOR INTERCONNECTION
STUDIES DESIGNED TO ACCELERATE INTERCONNECTION FOR ALL PROJECTS
IN THE PUBLIC UTILITY'S INTERCONNECTION QUEUE; AND
       (B) A PROCESS FOR THE PUBLIC UTILITY TO ACCEPT A SURETY BOND
IN LIEU OF A LETTER OF CREDIT OR CASH FOR INTERCONNECTION UPGRADE
WORK;AND
       (II) DISCUSS, AND THE PUBLIC UTILITY SHALL IMPLEMENT, A PROCESS
FOR THIRD-PARTY INTERCONNECTION STUDIES AND UPGRADES, WHICH
PROCESS MUST INCLUDE A LIST OF THIRD-PARTY CONTRACTORS THAT ARE
APPROVED BY THE PUBLIC UTILITY AND A PROCESS FOR CONTRACTORS TO BE
ADDED AND REMOVED FROM THE LIST AS APPLICABLE.
       ( c)IF AN INTERCONNECTION CUSTOMER ELECTS TO USE A
THIRD-PARTY CONTRACTOR TO PERFOR..\1 INTERCONNECTION STUDIES OR
UPGRADE WORK CONSISTENT WITH THE PUBLIC UTILITY'S INTERNAL
PROCESSES:
       (I) THE INTERCONNECTION CUSTOMER SHALL USE A CONTRACTOR
THAT IS APPROVED BY THE PUBLIC UTILITY PURSUANT TO SUBSECTION
(7)(b )(II) OF THIS SECTION;
       (II)   THE PUBLIC UTILITY IS NOT LIABLE FOR AND SHALL NOT
WARRANTY DESIGNS, CONSTRUCTION, OR WORK PERFORMED BY THE
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THIRD-PARTY CONTRACTOR THAT RESULTS IN DAMAGES, INJURY, OR DEATH;
      (III) ANY RELIABILITY IMPACTS FROM THIRD-PARTY CONTRACTOR
DESIGNS, CONSTRUCTION, OR OTHER UPGRADE WORK ARE INCLUDED AND
SPECIFICALLY DESIGNATED    IN   RELIABILITY METRIC   MEASUREMENTS
REQUIRED BY THE COMMISSION;
      (IV) THE THIRD-PARTY CONTRACTOR SHALL SUBMIT ANY DESIGNS
OR AS-BUILT ORA WINGS TO THE PUBLIC UTILITY WITHIN THREE BUSINESS
DAYS AFTER COMPLETION TO ALLOW THE PUBLIC UTILITY TO MAINTAIN
ACCURATE GEOGRAPHIC INFORMATION SYSTEM MAPPING;
      (V)     THE THIRD-PARTY    CONTRACTOR SHALL     PROVIDE ALL
INTERCONNECTION STUDIES AND OTHER DESIGN WORK TO THE PUBLIC
UTILITY, AND THE PUBLIC UTILITY MAY REVIEW AND REQUEST
MODIFICATIONS, INCLUDING REQUESTING ADDITIONAL ANALYSIS TO ENSURE
ACCURACY AND COMPLETION;
      (VI) THE PUBLIC UTILITY SHALL INSPECT ANY CONSTRUCTION WORK
PERFORMED BY THE THIRD-PARTY CONTRACTOR. THE THIRD-PARTY
CONTRACTOR SHALL OBTAIN THE PUBLIC UTILITY'S CONFIRMATION THAT THE
WORK IS COMPLETE PRIOR TO DEEMING ANY CONSTRUCTION WORK FINAL
AND COMPLETED. INSPECTIONS ARE AT THE EXPENSE OF THE THIRD-PARTY
CONTRACTOR. THE THIRD-PARTY CONTRACTOR SHALL PERFORM ANY
ADDITIONAL WORK REQUIRED TO ADDRESS SAFETY OR RELIABILITY
CONCERNS AT THE THIRD-PARTY CONTRACTOR'S EXPENSE.
      (VII)   NEITHER THE PUBLIC UTILITY NOR RATEPAYERS ARE
RESPONSIBLE FOR COSTS ASSOCIATED WITH REPAIRS OR CORRECTIONS TO
THIRD-PARTY WORK. COSTS AS SOCIATED WITH REPAIRS OR CORRECTIONS TO
THIRD-PARTY WORK ARE THE RESPONSIBILITY OF THE THIRD-PARTY
CONTRACTOR.
      (d) ON OR BEFORE DECEMBER 15, 2026, THE PUBLIC UTILITY SHALL
FILE A NOTICE WITH THE COMMISSION THAT INCLUDES A REPORT ON ANY
RECOMMENDATIONS OF THE WORKING GROUP AND INDICATE WHICH, IF ANY,
RECOMMENDATIONS ARE UNANIMOUSLY APPROVED BY THE WORKING
GROUP. THE REPORT MUST ALSO INDICATE WHICH RECOMMENDATIONS
REQUIRE OR MAY REQUIRE COMMISSION APPROVAL. THE PUBLIC UTILITY
SHALL MAKE APPROPRIATE FILINGS TO IMPLEMENT ANY RECOMMENDATIONS
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THAT REQUIRE COMMISSION APPROVAL ON OR BEFORE JANUARY 1, 2027.
       (8) ALL INTERCONNECTION UPGRADES AND RELATED UTILITY
CONSTRUCTION WORK PERFORMED BY A THIRD-PARTY CONTRACTOR MUST
MEET APPLICABLE SAFETY, RELIABILITY, LABOR, AND TECHNICAL
STAND ARDS, INCLUDING THE APPLICABLE LABOR REQUIREMENTS SET FORTH
IN SECTION 40-2-132.5 (5).
        SECTION 5. In Colorado Revised Statutes, 40-2-130.5, amend
(l)(a) introductory portion and (l)(a)(II) as follows:
       40-2-130.5. Dispatchable distributed generation - energy storage
- definitions - program capacity - program administration - rules.
      ( 1) Definitions. As used in this section, unless the context otherwise
reqmres:
      (a) "Dispatchable distributed generation" means distributed
generation paired with EITHER a co-located energy storage system OR A
STANDALONE ENERGY STORAGE SYSTEM that is:
     (II) Measured by the capacity of the distributed generation ENERGY
STORAGE SYSTEM in alternating current.
        SECTION 6. In Colorado Revised Statutes, 40-2-124, amend
(l)(i)(VI) as follows:
        40-2-124. Renewable energy standards - qualifying retail and
wholesale utilities - definitions - net metering - legislative declaration
- rules.
        ( 1) Each provider of retail electric service in the state of Colorado,
other than municipally owned utilities that serve forty thousand customers
or fewer, is a qualifying retail utility. Each qualifying retail utility, with the
exception of cooperative electric associations that have voted to exempt
themselves from commission jurisdiction pursuant to section 40-9.5-104
and municipally owned utilities, is subject to the rules established under this
article 2 by the commission. No additional regulatory authority is provided
to the commission other than that specifically contained in this section. In
accordance with article 4 of title 24, the commission shall revise or clarify
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existing rules to establish the following:
       U) Rules to accommodate aggregation and interconnection of retail
distributed generation, including:
         (VI) Requiring qualifying retail utilities to adopt procedures
designed to ensure that, for all renewable distributed generation or storage
facilities included in their net metering service:
      (A) The size of any off-site, single-mete1 installation does not
exceed five hund1ed kilowatts,
        (B) The size of any off-site, nrulti-mete1 installation does not exceed
tht cc hund1 ed kilowatts pet mete1, and
       (C) For any off-site facility exceeding th1ee hund1ed kilowatts
COVERED BY THIS SECTION, the installation and any necessary repair or
maintenance work is performed by a licensed master electrician, licensed
journeyman electrician, or licensed residential wireman or by properly
supervised apprentices, in addition to complying with all applicable
interconnection rules. THE COMMISSION SHALL EVALUATE THE SIZE OF
OFF-SITE FACILITY AND INSTALLATION LIMITATIONS AS PART OF A FUTURE
RENEWABLE ENERGY STANDARD COMPLIANCE PLAN.
       SECTION 7. 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 8-HOUSE BILL 26-1225
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.
J u ~  James Rashad Coleman, Sr.
SPEAKER OF THE HOUSE  PRESIDENT OF
OF REPRESENTATIVES  THE SENATE
v~~
Vanessa Reilly  Esther van Mourik
CHIEF CLERK OF THE HOUSE  SECRETARY OF
OF REPRESENTATIVES  THE SENATE
       APPROVED O\'I VY'10V1JU\rl       -s~
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                             ( ate and Time)
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