House Bill 26-1246: Protecting Colorado’s citizens, landscape, and economy

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

Editor’s update: House Bill 26-1246 was heard in the House Energy & Environment Committee on Thursday, March 12, 2026, and laid over for further consideration. The bill is expected to return to committee within approximately two weeks. Coloradans who want to weigh in before the next hearing can track the bill’s status and find contact information for committee members at leg.colorado.gov/committees/2026A/house/EnergyEnvironment.

Colorado is at an energy crossroads. Decisions being made today about how electricity is generated, transmitted, and paid for will shape our state’s economy, landscape, and cost of living for decades to come.

House Bill 26-1246 is a response to a simple but increasingly urgent problem: the system currently governing Colorado’s electricity infrastructure is placing growing burdens on ordinary citizens while failing to keep pace with the realities of modern energy demand.

At the center of that system is the Colorado Public Utilities Commission (PUC). The PUC exists because electricity utilities operate as state-sanctioned monopolies. Consumers cannot simply choose another provider when rates rise or service falters, so the state created a regulatory body to ensure those monopolies operate in the public interest.

In theory, the PUC protects consumers.

In practice, the incentives embedded in the system have increasingly worked in the opposite direction.

Under Colorado’s regulatory framework, utilities earn a guaranteed rate of return—often around 9 to 10 percent—on capital investments approved by regulators. When utilities build new infrastructure such as power plants or transmission lines, those investments are added to the utility’s “rate base,” and consumers ultimately pay the cost through higher electricity bills.

The larger the infrastructure program, the larger the guaranteed return.

This incentive structure has profound consequences.

Colorado’s current decarbonization policies—driven by legislation such as House Bill 19-1261 and subsequent electrification mandates—have accelerated plans for massive expansions of the electric grid. Utilities are proposing high-voltage transmission lines stretching across forests, plains, and rural communities in order to move electricity over long distances.

These projects are often justified as necessary for achieving statewide greenhouse-gas reduction targets.

Yet the statutory framework governing these policies includes important conditions that deserve careful scrutiny. Colorado law directs agencies not only to pursue greenhouse-gas reductions but to ensure that the measures adopted are demonstrably cost-effective and consistent with the public interest.

To date, however, it remains unclear whether the required cost-effectiveness analyses have been clearly demonstrated or whether the specific climate objectives tied to Colorado’s policies have been adequately defined.

This matters because the scale of the economic commitments involved is enormous.

The Colorado Energy Office’s “Pathways to Deep Decarbonization” report projects approximately $108 billion in electric-sector investment over the coming decades. Spread across Colorado’s population, that represents tens of thousands of dollars in infrastructure costs per household.

At the same time, the physical footprint of this infrastructure is transforming the state itself.

High-voltage transmission corridors require wide rights-of-way that cut across forests, prairies, and agricultural land. Communities face the possibility of eminent-domain proceedings as utilities seek to acquire the land necessary for these projects.

Colorado’s landscape—one of our greatest assets—is increasingly being reshaped to accommodate long-distance power transmission.

Ironically, long-distance transmission systems are not perfectly efficient.

Electricity loses energy as it travels across transmission and distribution lines. On average, roughly five percent of generated electricity is lost as heat before it ever reaches the customer. That means additional generation must occur somewhere to compensate for those losses.

In other words, the system being built to reduce emissions can actually require more electricity generation simply to overcome transmission inefficiencies.

At the same time, reliability concerns are becoming increasingly visible.

Public Safety Power Shutoffs—known as PSPS events—are becoming normalized across the western United States. Utilities intentionally shut off electricity to large regions when wildfire risk becomes too high for the grid to operate safely.

These events can cost communities millions of dollars in lost wages, spoiled goods, and disrupted economic activity.

When the solution to grid vulnerability becomes turning the grid off, it should be a warning sign that the system itself needs reconsideration.

Meanwhile, a new challenge is emerging that exposes the limitations of the current infrastructure model.

Artificial intelligence computing, advanced manufacturing, and modern data centers require enormous amounts of electricity—often hundreds of megawatts per facility. These projects involve billions of dollars in investment and cannot wait a decade for new transmission infrastructure to be planned, permitted, litigated, and constructed.

Companies facing these timelines are increasingly turning to a different approach: they build their own power.

Across the United States, developers are constructing behind-the-meter generation systems and private microgrids to supply electricity directly to large facilities rather than relying on traditional utilities.

Projects of this type are already underway in states such as Texas, Virginia, and Ohio. In 2025, New Hampshire became the first state to enact legislation formally recognizing these privately financed systems under a framework known as Consumer-Regulated Electric Utilities (CREUs).

Several other states are now exploring similar policies.

House Bill 26-1246 allows Colorado to participate in that emerging model.

The bill simply allows large-load users—such as data centers or industrial facilities—to build and operate power generation dedicated to their own operations without being classified as a public utility, so long as those systems remain separate from the public grid.

Importantly, these facilities are not exempt from environmental protections or safety regulations.

CREU projects would still be fully subject to environmental permitting, air-quality standards, building and fire codes, OSHA workplace safety rules, and right-of-way maintenance requirements. Nothing in the bill exempts facilities from carbon standards or other environmental regulations.

What the bill changes is who pays for the infrastructure.

Instead of forcing utilities to build new generation and transmission systems—projects whose costs are ultimately borne by ratepayers—large-load users can finance the power systems they require themselves.

For ordinary Coloradans, the benefit is straightforward.

Ratepayers are protected from subsidizing massive new infrastructure projects designed primarily to serve large industrial loads.

At the same time, locating generation near the point of use eliminates the roughly five percent energy losses associated with long-distance transmission. That means less electricity must be generated overall to serve the same demand.

These systems also offer advantages in resource conservation. Many modern distributed generation technologies use air-cooling rather than the water-intensive evaporative cooling systems used by traditional steam-cycle power plants.

In a semi-arid state like Colorado, conserving water matters.

Perhaps most importantly, CREU frameworks allow economic investment to proceed on timelines compatible with modern industry. Large-load users can scale generation predictably as their facilities expand rather than waiting years for transmission infrastructure.

Colorado now faces a choice.

We can continue expanding a system in which citizens—held captive by a state-enforced monopoly—pay ever higher rates as utilities build massive infrastructure projects earning guaranteed returns for investors.

Or we can allow innovation and private investment to shoulder the cost of meeting new energy demand.

House Bill 26-1246 does not dismantle Colorado’s existing utility system. It simply creates a parallel pathway for large-load users willing to finance their own energy infrastructure.

In doing so, it protects ratepayers, reduces pressure on Colorado’s landscapes, conserves water resources, and allows our state to compete for emerging industries rather than watching those investments move elsewhere.

The question is not whether companies will build their own power.

They already are.

The real question is whether Colorado will allow those investments to happen here—or whether we will continue forcing citizens to pay for a system designed for a very different era.

House Bill 26-1246 offers a practical step toward a more balanced energy future for Colorado.

For this reason, it is critically important that Colorado citizens actively engage with their elected representatives. Every legislator swears an oath to defend the certain, self-evident, Creator-endowed rights that form the foundation of our constitutional system. Yet in the reality of modern politics, constant lobbying from well-funded special interests can drown out the voices of ordinary citizens.

Utilities, advocacy organizations, and industry groups maintain full-time lobbying operations at the Capitol because they understand how influential constant presence can be.

If citizens remain silent, legislators will naturally hear far more from those organized interests than from the people they represent. Contacting your representatives, attending hearings, and voicing your perspective is not merely participation—it is the mechanism by which representative government stays accountable to the public rather than drifting toward the interests of those who profit most from the system.

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.