Net Metering

In December 2005 the Colorado Public Utilities Commission (PUC) adopted standards for net metering and interconnection, as required by Amendment 37, a renewable energy ballot initiative approved by Colorado voters in November 2004.

Customer-generators are eligible for net metering in Colorado for retail renewable distributed generation. The following sections describe the rules that apply to investor-owned utilities (IOUs), with the last section detailing net metering for municipal utilities and electric cooperatives. All utilities subject to the below net metering rules are required to provide net metering service at non-discriminatory rates to customer-generators.

Systems sized up to 200% of the customer’s annual average consumption that generate electricity using qualifying renewable energy resources are eligible for net metering in IOU service territories.

If a customer-generator does not own a single bi-directional meter, then the utility must provide one free of charge. Systems over 10 kilowatts (kW) in capacity require a second meter to measure the output for the counting of renewable energy credits (RECs).

S.B. 18-009, passed in March 2018, establishes that solar-plus-storage systems are eligible for net metering. In 2021, S.B. 261 established all renewable energy storage systems, i.e. energy storage that stores electricity from renewable sources, are eligible.

Net Excess Generation

Any customer’s net excess generation (NEG) in a given month is applied as a kilowatt-hour (kWh) credit to the customer’s next bill, with each kWh credit of NEG off-setting 1 kWh of electricity consumption in a future month. Excess credits are rolled over indefinitely, until the customer terminates service; upon termination, all excess credits are lost. At the end of each calendar year, a customer can choose to cash in their excess credits and be reimbursed at the utility’s average hourly incremental cost over that calendar year.

At the end of a calendar year or upon termination of service, a customer can donate any excess credits to a qualified third-party administrator, who will then use the credits to provide low-income energy assistance and bill reductions.

Utilities have the right to limit the total amount of rolled over credits, but the limit cannot be less than 100% of the customer’s reasonably expected average annual consumption. Any excess generation above the limit must be reimbursed at the utility’s average hourly incremental cost over the most recent 12-month period.

Renewable Energy Credits

The customer-generator retains ownership of any RECs associated with the energy generated by the customer-generator’s system. A utility may acquire the RECs by purchasing them from the customer-generator through a standard offer. All contracts for RECs for solar electric technologies located on site at customer facilities are required to have a minimum term of 20 years if the system is under 100 kW.

Meter Aggregation

A single customer with multiple meters located on contiguous property may elect to have their generator offset the load measured at more than one meter, a policy commonly referred to as “meter aggregation.” A customer who wants to aggregate their meters under net metering must give the utility a 30-day notice and specify the order in which they want their kWh credits applied to the multiple meters. All affected meters must be on the same rate schedule.

In 2021, S.B. 261 allowed master meter operators, like multi-family housing unit owners, to supply distributed generation electricity to customers. The Public Utilities Commission is currently forming rules to regulate how master meter operators and their tenants can participate in net metering.

Off-Site Net Metering

2021’s S.B. 261 also allowed off-site net metering. Generation facilities located on noncontiguous properties owned or leased by a customer are eligible for net metering, as long as the property is within their utility’s service territory. Utilities’s off-site net metering capacity must be at least 0.25% of their annual retail sales from the previous year.

Municipal Utilities and Electric Cooperatives

Colorado enacted legislation in March 2008 requiring municipal utilities with more than 5,000 customers and all electric cooperatives to offer net metering for residential systems up to 10 kW and commercial and industrial systems up to 25 kW (see H.B. 1160). Electric cooperatives and municipal utilities are authorized to exceed these minimum size standards.

Any customer’s NEG in a given month is applied as a kWh credit to the customer’s next bill, with each kWh credit of NEG off-setting 1 kWh of electricity consumption in a future month. Electric cooperatives and municipal utilities are required to pay for any remaining NEG at the end of an annual period based on a “rate deemed appropriate” by the electric cooperative or municipal utility.