Colorado’s ‘clean heat’ plan for utilities spurs concerns about costs

Rules requiring Colorado’s larger utilities that supply natural gas to homes and businesses cut their emissions by 41% over the next 10 years are catching heat from opponents who warn of higher energy costs, prompting one Republican lawmaker to vow to fight the plan “tooth and nail.”

The Colorado Public Utilities Commission approved the “clean heat” plan to carry out a 2021 law that directed utilities to reduce the emissions from the natural gas they provide as part of the overall state goal of cutting greenhouse gas pollution by 100% from 2005 levels by 2050. The PUC’s decision issued Dec. 1 said cutting emissions 41% from 2015 levels by 2035 is a step toward meeting the goal.

The decision will help make all-electric homes and buildings more affordable, advance progress toward Colorado’s climate goals, protect public health and cement Colorado’s role as a nationwide leader in clean heat policy, said Jim Dennison, a Colorado-based attorney with the Sierra Club.

Mi Familia Vota, which works with the Latino community on environmental justice and other issues, supported the PUC’s decision.

“This decision moves Colorado closer to an equitable transition away from fossil gas, and we’ll continue advocating for climate solutions that protect our communities and our future,” Christo Luna, deputy state director for Mi Familia Vota, said in a statement.

But opponents of the PUC’s decision argued it’s a mandate that will force families to buy “costly heat pumps, retrofits and electric appliances” to switch from gas to electricity and phase out natural gas. In a letter to the PUC, House Republican lawmakers said nearly a quarter of utility customers in the state qualify for energy assistance and the plan will boost that number “and push even more families into crisis.”

The legislators asked the PUC to reverse its decision.

Rep. Ty Winter of Trinidad, the assistant minority leader in the House, said the drive to move from coal and natural gas is costing jobs and cutting local and state revenue. As a result, Republicans and labor, whom Winter called “odd bedfellows,” have worked together to object to the clean-heat requirements.

Winter said he is hearing from constituents concerned about the clean-heat requirements and is telling them “the only way to fix this is at the ballot box.” When lawmakers return to the state Capitol in January, Republicans plan to call people to testify on energy bills being introduced.

“We’re going to fight this tooth and nail, and we’re going to use every avenue we have,” Winter said.

Jon Caldara, president of the libertarian-leaning Independence Institute, called the PUC’s decision “magical thinking” in a Dec. 7 column in Colorado Politics. “If we mandate it, reality will eventually fall in line!” he wrote.

“You cannot regulate your way to changing physics and the PUC thinks that you can,” Caldara told The Denver Post.

About two-thirds of the energy Coloradans use still comes from fossil fuels, Caldara said.

Renewable energy made up 43% of Colorado’s in-state electricity net generation in 2024, according to the Energy Information Administration. Coal-fired power plants accounted for 27% and natural gas made up about 29%.

Natural gas heats the majority of the state’s buildings, according to the Colorado Energy Office.

“They’re trying to regulate us away from any fossil fuels and taking away our appliances and our heaters. You’re increasing the load on electrification without there being any way to fill it,” Caldara said.

But Dennison of the Sierra Club said the heat plan doesn’t require any individual customer to get rid of gas appliances or heating systems.

“That remains completely voluntary,” Dennison said. “What the clean-heat framework does do is provide a mechanism for utilities to support individual consumer’s choice to electrify.”

The utilities that must reduce emissions from natural gas, including Xcel Energy and Black Hills Energy, are investing in electrification, Dennison said. Regulators approved a plan in 2024 by Xcel to invest $440 million, including money for rebates for heat pumps and energy efficiency. Heat pumps use electricity to both cool and heat buildings.

Dennison said Xcel still plans to spend nearly $2.9 billion on maintaining and expanding its gas infrastructure through 2030, more than 6 times as much as what it will spend on the clean heat plan.

As for concerns about the impact on ratepayers, the PUC’s approval of a 41% reduction in emissions doesn’t decide the cost of a utility’s plan, said Stacy Tellinghuisen, deputy director of policy development for the conservation group Western Resource Advocates.

“The PUC will still evaluate every utility’s clean heat plan and can decide if the costs are reasonable,” Tellinghuisen said.

The clean-heat legislation directed that utility plans be of the lowest reasonable cost. 

Tellinghuisen disputed that electrifying buildings will drive up costs and threaten the reliability of the electric grid. She said the anticipated growth of large data centers was a major factor in Xcel Energy’s projected demands for electricity in a plan recently approved by the PUC.

The clean-heat plan’s benefits for Coloradans include improved air quality and reduced greenhouse gas emissions contributing to climate change and its effects such as drought, Tellinghuisen said.

“It’s mid-December, and we have power outages across the Front Range that are preemptive because we’re worried about wildfires. That imposes costs,” she added.

Western Resource Advocates and other environmental groups wanted to see an emissions reduction goal of 55% by 2035. The Colorado Energy Office and the state air pollution control division backed a goal of 31%.