HB 26-1246: Protecting Coloradans from rising power costs and a broken system

By Rep. Ken DeGraaf | Guest Commentary, Rocky Mountain Voice

Editor's update: House Bill 26-1246 is scheduled to be heard in the House Energy & Environment Committee today, Thursday, March 12, 2026, at 1:30 p.m. in the Old State Library. Coloradans may listen live at leg.colorado.gov/agenda/committee/202622308545820.

Colorado is facing a turning point in energy policy. For years, families and businesses across our state have watched their electricity bills rise while our landscapes are increasingly carved up by massive transmission projects stretching from horizon to horizon. Forests, prairies, farms, and communities are being cut apart in the name of electrification and “grid modernization.”

Meanwhile, the people paying the price are the very citizens the system is supposed to protect.

House Bill 26-1246 is about restoring balance and protecting Coloradans from the unintended consequences of a system that has drifted far from its original purpose.

To understand why this bill matters, we need to start with the institution that oversees Colorado’s electricity system: the Public Utilities Commission.

The PUC is composed of four commissioners appointed by the governor. Their job, in theory, is to regulate utilities that operate as state-sanctioned monopolies. Because utilities like Xcel Energy operate without traditional market competition, the PUC exists to ensure that consumers are protected from excessive rates and unnecessary infrastructure spending.

But in recent years, that balance has shifted.

Under the banner of aggressive electrification policies and ESG-driven mandates, the PUC has increasingly approved massive infrastructure expansions that utilities are eager to build. These projects include long-distance high-voltage transmission lines that stretch across rural Colorado.

The reason utilities like these projects is simple: they are guaranteed investments.

When a utility builds a new transmission line or power plant, regulators allow it to earn a regulated rate of return—often around 9–10 percent—on the capital it spends. The more infrastructure that gets built, the larger the guaranteed return to investors.

Those costs, of course, are passed directly to ratepayers.

In other words, citizens pay higher electricity bills so utilities can earn guaranteed profits on ever-larger infrastructure projects.

This incentive structure has led to a troubling pattern. Transmission corridors now proposed across Colorado would cut through forests, agricultural land, wildlife habitat, and rural communities. In many cases these projects rely on eminent domain to take private property from landowners who have little ability to fight back.

Entire landscapes are being transformed in order to move electricity across long distances.

And the irony is that these long-distance transmission systems are not even particularly efficient.

Electricity loses energy as it travels across transmission lines. On average, about five percent of the power generated is lost as heat during transmission and distribution. That means additional electricity must be produced to compensate for those losses—often resulting in more generation and more emissions.

So the system we are building is not only reshaping Colorado’s natural landscape, it is also creating inefficiencies that work against the very environmental goals used to justify it.

Meanwhile, a new challenge is emerging that exposes just how fragile this model has become.

Large industrial facilities—particularly data centers supporting artificial intelligence and advanced computing—require enormous amounts of electricity. These facilities often demand hundreds of megawatts of power and need that power immediately.

But our current system is not designed to respond quickly.

Transmission lines can take ten years or more to plan, permit, litigate, and construct. Power plants often take years to approve and build. Companies making billion-dollar investment decisions cannot wait that long.

As a result, many of these companies are turning to a different solution: they build their own power.

Across the United States, data center developers are constructing private microgrids and dedicated generation systems to power their facilities without relying on traditional utilities. Projects like these are already underway in Texas, Virginia, Ohio, and other states.

New Hampshire recently became the first state to pass legislation allowing these privately financed systems—called Consumer-Regulated Electric Utilities—to operate without being treated as traditional utilities as long as they remain separate from the public grid.

Several other states are now exploring similar frameworks.

Colorado should not be left behind.

House Bill 26-1246 simply recognizes a reality that is already happening. Large-load users are willing to build and finance their own power systems. They do not want to burden Colorado ratepayers with the cost of new infrastructure.

Under current rules, however, those projects can face regulatory barriers that force them back into the traditional utility system—where utilities build the infrastructure and ratepayers absorb the cost.

HB 1246 removes that barrier.

It allows large new industrial users to build and operate their own power generation if they choose, without being treated as a regulated public utility. These systems would serve only the host facility and would not sell electricity to the public.

That means the company creating the demand pays for the infrastructure required to meet it.

For Colorado families, the benefit is straightforward: protection from rate hikes driven by massive infrastructure projects built primarily to serve large new industrial loads.

The bill also has another advantage that is particularly important for our state: it can conserve water.

Many modern distributed generation systems—such as advanced turbines or fuel cells—can operate with air-cooling rather than the water-intensive cooling systems used by traditional steam-cycle power plants. In a semi-arid state where water is one of our most precious resources, that matters.

There is also a reliability issue that deserves attention.

Across the West, Public Safety Power Shutoffs—known as PSPS events—are becoming increasingly common. Utilities are now deliberately shutting off electricity to entire regions during periods of wildfire risk.

Each of these events can cost communities millions of dollars in lost wages, spoiled goods, and interrupted economic activity.

The normalization of PSPS is a loud warning that our system is struggling to keep up with the demands placed on it.

House Bill 26-1246 does not solve every challenge facing Colorado’s electricity grid. But it does create a path forward that protects citizens from unnecessary costs while allowing economic investment to proceed.

It says that if a company is willing to build and finance its own power generation, the state should allow that project to move forward without forcing utilities to build billions of dollars in new infrastructure funded by ratepayers.

Colorado has a choice.

We can continue expanding a system where citizens are captive customers of a state-enforced monopoly while utilities earn guaranteed returns on ever-larger projects.

Or we can open the door to innovation, competition, and responsible investment that protects consumers while allowing our economy to grow.

House Bill 26-1246 is a step toward that future.

Rep. Ken DeGraaf represents House District 22 in northeast Colorado Springs and has served in the Colorado House since 2023. He’s a 27-year U.S. Air Force veteran and pilot, a graduate of the U.S. Air Force Academy and holds a master’s in structural dynamics from Columbia University.

Editor’s note: Opinions expressed in commentary pieces are those of the author and do not necessarily reflect the opinions of the management of the Rocky Mountain Voice, but even so we support the constitutional right of the author to express those opinions.