First Regular Session Sixty-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 05-0469.01 Duane Gall HOUSE BILL 05-1133 HOUSE SPONSORSHIP Plant, SENATE SPONSORSHIP (None), House Committees Senate Committees Transportation & Energy A BILL FOR AN ACT Concerning measures to promote energy efficiency. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Authorizes local governments to require investor-owned electric and gas utilities to collect an energy efficiency surcharge from customers within the local governments' jurisdiction and to direct the revenue, less the utility's costs up to 5% of the total, into programs that promote the installation of cost-saving measures such as insulation, load management systems, and energy-efficient heating and cooling systems in homes and businesses. For local governments whose spending is constrained by the "TABOR amendment," article X of section 20 of the state constitution, allows the revenue to be sent directly to an exempt enterprise or nonprofit organization under contract with the local government. Directs the public utilities commission (PUC) to adopt rules establishing funding and cost-recovery mechanisms for distributors of natural gas to engage in conservation and energy efficiency programs. Requires periodic reports from the utilities and PUC review and approval of such programs. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Article 12.5 of title 29, Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read: 29-12.5-105. Residential and commercial utility cost savings measures - energy efficiency surcharge - authorization. (1) The governing body of a municipality or county whose citizens are served in full or part by an investor-owned public utility furnishing electricity or natural gas may elect to adopt a utility bill surcharge on electricity, natural gas, or both, in accordance with this section. The utility bill surcharge shall be used to fund energy efficiency or load management programs, or both, implemented by the municipality or county or by a contractor selected by the municipality or county. The surcharge shall be collected on behalf of the municipality or county by the public utility or utilities if so requested. (2) The surcharge shall be in an amount determined by the governing body, not to exceed two-tenths of one cent per kilowatt-hour of electricity or twenty cents per thousand cubic feet of natural gas. (3) The utility shall collect the surcharge on a monthly basis, as a line item on each customer's bill, and shall remit the net proceeds on a monthly basis to the treasurer of the county or municipality or to the enterprise or nonprofit entity designated by the governing body pursuant to subsection (5) of this section. As used in this subsection (3), "net proceeds" means the total amount collected minus the utility's expenses incurred in collecting and accounting for the surcharge, which expenses shall not exceed five percent of the total amount collected. (4) The county or municipality shall establish a program to distribute the proceeds of the surcharge in the form of grants, rebates, or other incentives to subsidize the installation of utility cost-savings measures or energy saving measures in homes, businesses, or both, within the boundaries of the county or municipality and the service area of the utility. Such grants or rebates shall be awarded to applicants on the basis of fair and objective criteria established by the governing body. Administrative costs of the program, including advertising, shall not exceed twenty percent of the net proceeds. (5) If the receipt and expenditure of moneys under this section would otherwise be constrained by the requirements of article X, section 20 of the Colorado constitution, the governing body may establish an enterprise, as defined in said constitutional provision, or designate a nonprofit entity to receive and expend such moneys on the board's behalf. The activities of any such enterprise or nonprofit entity shall be specified in a contract with the board and shall be subject to an annual audit, review, or compilation by a certified public accountant selected by the governing body. 29-12.5-106. Monitoring and reporting of energy and cost savings. The governing body shall monitor the reductions in energy consumption and cost savings attributable to the utility cost-savings measures and energy saving measures financed pursuant to section 29-12.5-105 and shall annually prepare and make available to the public a report documenting such reductions and savings. The report may be based upon an analysis of the utility's billing records by customer address, or upon case histories or surveys of the recipients of grants or rebates and other utility customers. SECTION 2. 40-3.2-101, Colorado Revised Statutes, is amended to read: 40-3.2-101. Legislative declaration. The general assembly hereby finds, determines, and declares that providing a funding mechanism mechanisms to encourage Colorado's public utilities to reduce emissions or air pollutants is a matter and to increase energy efficiency are matters of statewide concern. The general assembly further finds that the public interest is served by providing such funding mechanism mechanisms. Such reduction efforts will result in an improvement in the quality of life and health of Colorado citizens and an increase in the attractiveness of Colorado as a place to live and conduct business. SECTION 3. Article 3.2 of title 40, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 40-3.2-103. Gas distribution utility energy efficiency programs - recovery of costs. (1) On or before September 30, 2005, the commission shall commence a rule-making proceeding to develop funding and cost recovery mechanisms for energy efficiency and conservation programs implemented by investor-owned gas distribution utilities. The rule-making shall also identify and remove disincentives or barriers that inhibit gas distribution utilities from investing in cost-effective energy efficiency and conservation programs for their customers. (2) As part of the rule-making proceeding required by subsection (1) of this section, the commission shall: (a) Adopt a procedure for allowing gas utilities to recover the cost of energy efficiency and conservation programs through an annual cost adjustment mechanism similar to that used by Public Service Company of Colorado, or its successors and affiliates, for its electricity demand-side management programs as of January 1, 2005; (b) Adopt a procedure for decoupling a gas distribution utility's sales and revenues; and (c) Consider adopting mechanisms for rewarding gas distribution utilities for investments in cost-effective energy efficiency and conservation programs and measures. (3) Within six months after the completion of the rule-making required by subsection (1) of this section, investor-owned gas distribution utilities shall: (a) Develop and propose a set of energy efficiency and conservation programs for their customers, subject to approval by the commission pursuant to subsection (4) of this section; and (b) In implementing such programs, use their best efforts to offer energy efficiency and conservation programs to all classes of customers and maximize customer participation. (4) The commission shall expeditiously review the energy efficiency and conservation programs proposed pursuant to subsection (3) of this section, and shall approve such programs if they appear to be cost-effective. (5) Gas distribution utilities shall submit to the commission reports on their energy efficiency and conservation programs at least once every twenty-four months. The reports shall document program expenditures, energy savings impacts and the techniques used to estimate these impacts, the cost-effectiveness of program expenditures, and any other information the commission may require pursuant to its rule-making authority. (6) As used in this section: (a) "Cost-effective", with reference to an energy efficiency or conservation program or related measure, means having a benefit-cost ratio greater than one using the total resource cost test; and (b) "Total resource cost test" means a determination of cost-effectiveness that considers costs paid by both participating customers and the utility, as well as the utility's net avoided energy supply costs. SECTION 4. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.