The Colorado Public Utilities Commission (PUC) has adopted ambitious $67.5 million building electrification goals for Xcel Energy, the state’s largest utility. This investment is a 21% increase over what was proposed by Xcel, and will be an almost twenty-fold increase from Xcel’s current beneficial electrification spending by 2026.
While not the $79 million goal proposed by the Southwest Energy Efficiency Project (SWEEP), Western Resource Advocates (WRA), NRDC (Natural Resources Defense Council), Sierra Club, and the City of Boulder, this investment will reduce natural gas usage by 2 million dekatherms over three years. If Xcel achieves these new goals, the utility will cumulatively reduce greenhouse gas (GHG) emissions by more than 107,000 metric tons between 2024 and 2026.
These beneficial electrification goals are the first established by the PUC since the passage of 2021 legislation, which requires utility companies to invest in beneficial electrification and set GHG emissions reduction targets for natural gas utilities. Xcel is required to file its first Clean Heat Plan by August 1, which will lay out the portfolio of strategies it will use to reduce GHG emissions in response to state requirements. The beneficial electrification goals approved in this current case will lay the groundwork for that plan.
The PUC also voted to end energy efficiency rebates for certain gas-fired equipment, including hot water heaters and gas heating in new homes, with a goal to completely end subsidies for gas-fired equipment by 2027. This decision will increase the push toward electrification of these gas-powered technologies and require gas energy efficiency programs to evolve to focus more on weatherization and building shell improvements.
In addition to the beneficial electrification goals and policies, the PUC adopted an electric energy efficiency goal of 440 gigawatt hours (GWh) per year, while increasing the focus on energy efficiency for low-income households and households in disproportionately impacted communities. Although slightly lower than Xcel’s current goal of 500 GWh per year, these goals will ensure that Colorado remains a leader in equitable energy efficiency.
These decisions are all part of Xcel’s Demand-Side Management and Beneficial Electrification Strategic Issues proceeding currently pending in front of the PUC. The decisions are based on the commission’s preliminary oral deliberations. We expect a written decision implementing these findings in the coming weeks.
“With the adoption of these ambitious beneficial electrification and energy efficiency goals and budgets, the Colorado Public Utilities Commission took a big step towards achieving the state’s decarbonization goals,” said Justin Brant, SWEEP’s utility program director. “We look forward to working with Xcel Energy to design and implement programs to achieve these goals in the coming years.”
“The Commission’s decision is a step closer to a clean energy future,” said Carolyn Elam, the City of Boulder’s sustainability senior manager for energy systems. “It sends a strong message that our utilities need to prioritize helping customers transition away from natural gas to affordable, healthier electric options.”
“We applaud the Colorado Public Utilities Commission for adopting beneficial electrification and efficiency targets that help lay the groundwork for Xcel to meet its Clean Heat emission reduction goals,” said Meera Fickling, senior climate policy analyst at WRA. “The commission’s decision also redirects future efficiency investments toward electric heat pumps and heat pump water heaters and away from fossil gas appliances. These measures will most effectively reduce Colorado’s greenhouse gas emissions over time.”
“Burning gas indoors creates dangerous indoor air pollution and contributes to climate change,” said Ren Smith, an organizer with Sierra Club. “The Commission’s approval of beneficial electrification goals for Xcel will help customers improve the air quality in their homes and reduce climate pollution — all while reducing reliance on expensive and volatile gas prices.”
“Meeting Colorado’s climate and air quality goals depends on more efficient buildings that run on electricity powered by renewable energy, instead of burning fossil fuels,” said Alana Miller, Colorado policy director for NRDC. “The Commission’s decision directs the investment of the state’s largest utility to be better aligned with climate, public health, and economic justice outcomes.”
“This decision is a strong first step toward building decarbonization in Colorado,” said Michael Hiatt, an Earthjustice attorney representing SWEEP. “The Commission correctly recognized the need to step up and embrace the bold actions necessary to meet the climate crisis and improve Coloradans’ health.”