DENVER–Natural gas utilities would be required to buy “renewable natural gas” to augment their underground natural gas supplies under Senate Bill 20-150, introduced on Jan. 28 by Senator Chris Hansen, D-Denver.
The bill requires the Colorado Public Utilities Commission (PUC) to adopt rules by July 31, 2021 creating a “renewable natural gas program” for both large and small natural gas utilities that would include renewable natural gas “in the broader set of low-carbon resources that may leverage and decarbonize the existing natural gas system to reduce greenhouse gas emissions.”
The legislative declaration says in part, “Natural gas utilities can reduce emissions from the direct use of natural gas by procuring renewable natural gas and investing in renewable natural gas infrastructure.”
It also says the mandated program “should facilitate these procurements and investments while also protecting Colorado consumers.”
“Renewable natural gas” is defined as “biogas that is blended with, or substituted for, geologic natural gas,” hydrogen gas “derived from renewable energy sources,” and methane gas from various sources including coalbed methane, municipal garbage dumps, waste tire or garbage burning and “biogas recovery from manure management systems and anerobic digesters.”
Gas company “portfolio targets” would require minimums of 5% of gas purchased for retail sale by 2025, 10% by 2030 and 15% after January 1, 2035.
The bill requires the PUC to create a process allowing utilities “to fully recover prudently incurred costs” of the program, which means customers will end up paying for it “by means of an automatic adjustment rule or another recovery mechanism authorized by rule.”
Infrastructure built by a utility up to 5% of the utility’s “total revenue requirements” for a year appears to be eligible for Colorado’s standard guaranteed 10% profit for utilities on “steel for fuel” infrastructure investment that also applies to things such as windmills and solar panel,s as well as new gas-fired rapid-dispatch backup generators required for grid stability.