On December 1, 2025, the Colorado Public Utilities Commission (PUC) issued a decision establishing a new greenhouse gas emission reduction target for certain natural gas utilities. The rule sets a goal of reducing emissions by 41 percent from 2015 levels by the year 2035. The Commission postponed setting additional targets for 2040, 2045, and 2050 until at least December 1, 2032.
The PUC began its rulemaking process for these targets in July 2025. A public comment hearing was held on September 18, and written comments were accepted throughout the process. Stakeholders or individuals who wish to challenge the new rules may submit an Application for Rehearing, Reargument, or Reconsideration by December 22. The Commission will review these requests and discuss them publicly during a January meeting.
The decision follows requirements set out in Senate Bill 21-264. This legislation mandates that investor-owned gas utilities with fewer than 90,000 customers develop clean heat plans to help meet statewide greenhouse gas reduction goals. Initial targets were set for reductions by both 2025 and 2030; the law also directs the PUC to establish future targets through rulemaking processes.
The new rule applies specifically to three investor-owned gas utilities: Atmos Energy, Black Hills Energy, and Xcel Energy. Customers not served by these companies are not affected by the requirements.
Utilities can use several methods to achieve their clean heat targets. These include energy efficiency programs, electrification efforts such as encouraging adoption of electric heat pumps, recovered methane usage, green hydrogen projects, thermal energy solutions, and pyrolysis of tires. Customers have opportunities to participate voluntarily through rebates and incentives for making energy efficiency upgrades or switching to electric heating systems.
No limit has been set on how much recovered methane may be used toward meeting emission reduction goals under this rule.
When reviewing utility proposals under these rules, the PUC must consult with the Colorado Department of Public Health and Environment. It must also consider whether proposed plans achieve emission reductions at reasonable costs while taking into account impacts on customer bills. Evaluations include fuel costs, investments associated with clean heat measures, infrastructure expenses related to natural gas systems, operational costs of those systems, as well as social costs linked to carbon and methane emissions.
Each utility’s Clean Heat Plan application must present scenarios showing estimated compliance costs along with projected emission reductions that do not exceed a legislatively established cost cap—set at no more than 2.5% of annual gas bills per customer.
To date, two Clean Heat Plans have been approved by the PUC; a third is still under consideration.
More information about current proceedings is available on the PUC website.
