Colorado bill would let regulators compel Xcel to put Comanche 3 costs on every electric bill for decades

DENVER — A bill moving through the Colorado House would give state regulators the power to order Xcel Energy and other investor-owned utilities to recover major costs through bonds repaid by a decades-long charge on every customer’s electric bill, a fundamental rewiring of who decides how Coloradans pay for energy infrastructure.

HB26-1326, the Colorado Public Utilities Commission sunset bill, cleared the House Energy and Environment Committee on April 23 by a 9-4 Democrat-led party-line vote. The four no votes came from committee Republicans Rep. DeGraaf, Rep. Slaugh, Rep. Woog and Rep. Barron. The bill subsequently cleared the House Finance Committee. The third revised fiscal note dated May 1 reflects that committee’s amendments and was published for House Appropriations, the bill’s next stop on the House side.

Sponsored by House Majority Leader Rep. Monica Duran, D-Wheat Ridge, and Rep. Jenny Willford, D-Northglenn, with Senate Majority Leader Sen. Robert Rodriguez and Sen. Lisa Cutter leading in the upper chamber, the measure carries no Republican cosponsors. Its central substantive change sits in Sections 13 through 18 of the preamended bill, which rewrite the 2019 Colorado Energy Impact Bond Act. The pivotal sentence lands at C.R.S. 40-41-103: a single line that lets the Public Utilities Commission direct an electric utility to apply for what is called a financing order. Today the utility decides whether to file. Under the bill, the regulator decides.

In plain English, securitization means a utility issues bonds and pays them back over 20 to 30 years through a charge added to every customer’s bill. The charge cannot be avoided by switching plans or moving providers. As the Denver Gazette reported on April 27, the charge “stays on every bill, with periodic adjustments, only until the bonds are repaid.” Repayment, the paper notes, runs “typically 20 to 30 years.”

What the 2019 Energy Impact Bond Act does today

Colorado’s existing securitization framework dates to 2019’s SB19-236, which the DORA sunset report describes as the bill through which “the General Assembly first empowered the Commission to implement securitization.” Then-Rep. Chris Hansen, who was first introduced to the concept by former PUC commissioner Ron Lehr, sponsored the legislation; an earlier 2018 effort had failed before Democrats took unified control of both chambers.

The current law is narrow. A utility may apply, at its sole discretion, to securitize costs in exactly two situations: the early retirement of a coal plant or the implementation of an approved wildfire mitigation plan. The canonical existing use case is Comanche 3, the 750-megawatt coal unit at Xcel’s Comanche Generating Station near Pueblo. Xcel agreed in a 2023 settlement to use securitization to recover the remaining debt on the plant, which was built to operate until 2070 but is now scheduled for retirement no later than 2031. That deal was voluntary, filed by Xcel under existing law.

What DORA recommended

HB26-1326 implements 23 numbered recommendations from the October 15, 2025 sunset review of the Public Utilities Commission produced by the Colorado Office of Policy, Research and Regulatory Reform at the Department of Regulatory Agencies. Recommendation 5 is the one that matters here.

DORA’s reasoning rests on a structural argument about how regulated monopoly utilities make money. Investor-owned utilities earn an authorized return on equity from their rate base, the pool of capital investments the regulator has approved for cost recovery. The bigger the rate base, the bigger the profit. “A utility has a natural incentive to include as many investments as possible into its rate base because doing so will increase its profitability,” the report says.

Securitization works the other way. It moves capital off the utility’s books and onto ratepayer bills as a separate charge, replacing utility-financed debt at one rate with bond-financed debt at a lower one. In a 2023 PUC docket on coal-plant cost recovery, Ron Lehr, a former PUC commissioner, told the commission that the interest under Xcel’s preferred recovery approach “would be 9.25%” against a bundled securitization rate of “4.8%,” as reported by Big Pivots. Lower borrowing costs flow through to customers as smaller bills. They also flow away from utility shareholders.

DORA’s conclusion: because utilities have a financial reason to avoid securitization even when it would save customers money, ratepayer benefits “may thus be foreclosed if the Commission remains unable to direct utilities to file for approval of financing orders.” The bill amends C.R.S. 40-41-103 to add a new opening sentence: “The commission may direct an electric utility to file an application for a financing order with the commission.”

What the bill expands

Two other changes deserve attention. The bill broadens the menu of eligible costs. Where the 2019 statute limits securitization to coal retirement and wildfire mitigation, HB26-1326 expands it to any “programs or projects to mitigate the effects of extreme weather, wildfires, climate change, or other hazards.” That last phrase is open-ended, and it is what turns the bill into more than a technical fix. The bill also adds a new finding the commission must make before approving any financing order: the cost recovery must be “reasonable and in the interest of ratepayers.”

The Energy and Environment Committee shortened the sunset extension on April 23. The introduced version would have continued the Public Utilities Commission for 11 years, to September 1, 2037. The committee amended that down to 7 years, to September 1, 2033, and stripped a controversial provision that would have let commissioners deliberate on certain matters behind closed doors.

The Comanche 3 angle

The reason ratepayers should pay attention now is sitting offline near Pueblo. Comanche 3, Xcel’s $1.3 billion coal unit, has been shut down since August 12, 2025, when, according to a Colorado Sun report, the plant experienced “elevated vibrations” that tripped the turbine and caused “notable damage to the unit.” The commission’s own staff has documented more than 900 days of outages at Comanche 3 since it opened in 2010. A 2021 PUC staff report concluded that “poor maintenance practices likely contributed” to a year-long shutdown that began in 2020.

Repairs are estimated at $15 million to $26 million, with Xcel’s share roughly $4.6 million after insurance. Service is projected to resume in mid-July 2026. To cover the gap, the commission has already approved a one-year extension of the older Comanche 2 unit through the end of 2026.

The cost-recovery question for Comanche 3 is sitting in a live PUC docket. Under existing law, Xcel decides whether to ask the commission to securitize those costs. If HB26-1326 becomes law, the commission could direct Xcel to file. The repair bill, the replacement-power costs, and the long-term debt service on a plant scheduled for retirement no later than 2031 could land on every Xcel ratepayer’s bill as a non-bypassable charge stretching well past the plant’s own end-of-life. As Colorado Newsline reported in December, the city of Boulder told the commission in a filing that “ratepayers continue to bear the consequences of Public Service’s failings when it comes to Comanche 3. At some point, the bleeding must stop.”

The free-market critique

The Independence Institute‘s energy policy analyst, Sarah Montalbano, submitted written testimony to the committee on April 23 making the affordability and rule-of-law case against compelled securitization. Her argument, in her words: “Authorizing the PUC to compel utilities to write down those government-created losses converts securitization from a ratepayer protection tool into a financial mechanism for implementing legislative policy goals.”

That is the central objection Montalbano puts on the record, and the bill text supports the breadth she describes. A voluntary tool that lets a utility opt into lower-cost financing becomes, with one statutory edit, a mandatory mechanism the regulator can use to implement whatever the General Assembly has decided ratepayers should pay for next. The same authority that could force Xcel to securitize Comanche 3 cost recovery could also be used on the retirement costs of any other facility, the costs of any “approved program or project” related to climate change or “other hazards,” or the stranded-asset write-downs of natural gas infrastructure that policymakers have decided to phase out. The DORA report itself flags the same expansion path, noting that as gas infrastructure becomes a “stranded asset” no longer benefiting ratepayers, securitization could be applied to it as well.

The regulated utilities opposed the provision as well. The Sum and Substance reported that Xcel Colorado President Robert Kenney and Black Hills regulatory director Michael Harrington both argued that securitization is the right tool for some capital outlays but not others, and that the utility, not the regulator, should make that call. Action Colorado President Sara Blackhurst told the committee that securitization’s longer payback periods would push utility bills higher for “cost-weary Coloradans.” Upstate Colorado Economic Development President Rich Werner went further: “Asking a private company to change its financial model is really something that’s counterintuitive and outside the scope of this commission.”

The progressive counter

Western Resource Advocates’ senior policy advisor Clare Valentine made the supporting argument in terms that confirm DORA’s incentive theory. Investor-owned utilities like Xcel and Black Hills, she told the committee, “have incentives to avoid securitization because it can decrease their profits.” That, in her view, is precisely why regulators should be able to step in and order it. Valentine’s framing concedes the point Montalbano flags: securitization moves money. The disagreement is over which direction.

The on-air segment

The bill drew attention on The Kim Monson Show on May 4, where guest host Brad Beck walked through the consumer angle in the closing minutes of the first segment. Beck told listeners HB26-1326 would let the Public Utilities Commission direct investor-owned utilities to use securitization under the 2019 Colorado Energy Impact Bond Act, and laid out the mechanism by asking who pays. The bonds, he said, would be backed by a “decades-long charge” on the customer: “guess who? You, the ratepayer.”

Beck’s segment cited the bill’s PUC sunset extension to 2037, which reflects the version as introduced. The Energy and Environment Committee amended that figure down to 2033 on April 23, before the segment aired.

What to watch

The bill is at House Appropriations after clearing Energy and Environment on April 23 and Finance the following week. After House passage it heads to the Senate, where Sens. Rodriguez and Cutter are the prime sponsors. Republicans have made the compelled-securitization provision their central objection, but per Sum and Substance reporting, no committee member moved to remove it from HB26-1326 in the April 23 hearing. Floor votes will determine whether anyone forces a record vote on whether a regulator should be able to put a 20-to-30-year charge on every Xcel ratepayer’s bill without the utility ever having to ask. If HB26-1326 is not enacted, the Public Utilities Commission expires on September 1, 2026.