Colorado § 40-3.2-107 - Costs of methane pollution in gas DSM program planning - rules - definitions.

§ 40-3.2-107. Costs of methane pollution in gas DSM program planning - rules - definitions.

(1) The commission shall require a gas public utility subject to commission jurisdiction to consider the social cost of methane emissions, as set forth in subsection (2) of this section, when determining the cost, benefit, or net present value of revenue requirements of any plan or proposal submitted in an application related to, or the commission's evaluation of, programs adopted under section 40-3.2-103.

(2) (a) The commission shall base the social cost of methane emissions on the most recent assessment of the global social cost of methane developed by the federal government, using a discount rate of two and one-half percent or less as updated to reflect the latest available figures derived from peer-reviewed, published studies; except that, beginning on September 7, 2021, the commission shall use a social cost of methane of not less than one thousand seven hundred fifty-six dollars per short ton. The commission shall modify the social cost of methane emissions based on escalation rates of the 2020 base cost by an amount that is equal to or greater than the escalation rates established in the addendum to the technical support document and shall use a discount rate that does not exceed the lesser of two and one-half percent or any lower value established by the most recent available successor to the technical support document.

(b) When calculating the cost of methane emissions for any purpose listed in subsection (1) of this section, the commission shall obtain and apply the best available values for natural gas leakage during the extraction, processing, transportation, and delivery of natural gas by the gas public utility as well as leakage from piping or other equipment on customer premises. The commission shall take into account any relevant data and emissions accounting methodologies developed by the air quality control commission pursuant to section 25-7-140 regarding methane leakage rates and the appropriate global warming potential of methane. The commission shall use the same discount rate as that used to develop the federal social cost of methane, as set forth in the addendum to the technical support document.

(c) Notwithstanding the discount rate used for the cost of methane emissions, the commission shall discount other future cost streams into the net present value analysis of any resource portfolio in the gas DSM program planning process using a discount rate that the commission deems relevant to the parties responsible for financing or paying these future costs. When ratepayers are covering costs without investment from gas public utilities, such as environmental costs or pass-through fuel costs, the commission shall give consideration to discounting those costs with a stable long-term inflation rate that, in the commission's judgment, accurately represents the net present value of future cash flows experienced by ratepayers.

(3) As used in this section:

(a) "Addendum to the technical support document" means the 2016 addendum of the federal interagency working group on social cost of greenhouse gases, entitled "Addendum to Technical Support Document on Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866: Application of the Methodology to Estimate the Social Cost of Methane and the Social Cost of Nitrous Oxide".

(b) "Technical support document" means the 2016 technical support document of the federal interagency working group on social cost of greenhouse gases, entitled "Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866".

Source: L. 2021: Entire section added, (HB 21-1238), ch. 330, p. 2138, § 7, effective September 7.

Cross references: For the legislative declaration in HB 21-1238, see section 1 of chapter 330, Session Laws of Colorado 2021.