In a decision that sets a nationwide example for states aiming to decarbonize their gas systems, the Colorado Public Utilities Commission approved a strongly electrification-focused Clean Heat Plan for Xcel Energy, the state’s largest gas utility. Sierra Club’s Environmental Law Program led a group of nine intervenors in advancing legal arguments that ultimately defeated Xcel’s original application, which focused on false solutions for decarbonization like carbon offsets, biomethane and blending hydrogen instead of electrification. This win in Colorado’s first-ever Clean Heat Plan instead includes (1) a $440 million portfolio composed almost entirely of electrification and energy efficiency measures, (2) a decisive rejection of Xcel’s proposal to include false solutions in its portfolio and (3) clear directions to Xcel to better reflect electrification’s declining costs and its benefits for air quality and public health in future plans.
Under Colorado’s Clean Heat statute, gas utilities must file plans to meet emission reduction targets, including a 2030 target to reduce their emissions 22% below 2015 levels. Xcel’s original application proposed to spend over $430 million on carbon offsets, “certified” natural gas, biomethane, and blending hydrogen—measures that would do nothing to reduce the growth of the gas system or electrify buildings. ELP argued that some of these measures cannot legally count toward Xcel’s Clean Heat targets, and exposed fatal deficiencies in other measures by cross-examining Xcel’s witnesses. Sierra Club’s organizers also turned out dozens of community members to give written and verbal comments expressing concern about a dangerous, wasteful proposed hydrogen blending pilot. The Commission agreed with Sierra Club’s legal position and our arguments that Xcel’s half-baked alternative fuel proposals were deficient, approving only $10 million for biomethane if Xcel can meet additional requirements.
The Commission's $440 million approved portfolio focuses almost exclusively on electrification and energy efficiency measures, with direction to prioritize low-cost, high-impact solutions that Sierra Club and partners advocated for, such as all-electric construction and air-conditioning to heat pump conversions. The Commission required Xcel to use at least 20% of its customer incentive funds to benefit low-income and disproportionately-impacted communities, and to increase enrollment in its percentage of income payment plan, consistent with Sierra Club’s recommendations. The Commissioners recognized that these are part of a “much larger, much needed, set of interventions” to protect these customers “against the broader equity and affordability challenges within the gas system” that include price spikes, air quality harms, and costly maintenance. The Commission also agreed with Sierra Club that Xcel was wrong to exclude over 400,000 customers from building electrification programs simply because they receive gas service, but not electric service, from Xcel. The portfolio is expected to avoid more than 775,000 tons of carbon emissions by 2027 and puts Xcel’s 2030 Clean Heat target within reach.
Finally, the Commission directed Xcel’s future plans to better reflect electrification’s declining costs, public health benefits, and role in avoiding unnecessary gas system costs. The guidance in this decision builds on a recent win in Xcel’s inaugural Gas Infrastructure Plan, where the Commission required Xcel’s planning to better account for electrification policies and evaluate electrification as a way to avoid growing the gas system.
Sierra Club was represented by Environmental Law Program attorneys Jim Dennison and Matt Gerhart. Sierra Club’s Field Department and Colorado Chapter’s organizing efforts complemented our legal intervention, and contributed to the public pressure that defeated Xcel’s hydrogen blending pilot proposal.