On December 1, 2025, the Colorado Public Utilities Commission (PUC) issued a decision establishing new greenhouse gas emission reduction targets for certain natural gas utilities. The ruling sets a target of a 41 percent reduction in emissions by 2035 from the levels recorded in 2015. The Commission postponed decisions on future targets for the years 2040, 2045, and 2050 until at least December 1, 2032.
The PUC began its rulemaking process to determine these targets in July 2025. A public comment hearing took place on September 18, and written comments were accepted throughout the proceeding. According to standard procedure, individuals or organizations can request that the Commission reconsider its decision by filing an Application for Rehearing, Reargument, or Reconsideration by December 22. The Commission will review these requests and deliberate publicly during a January meeting. Members of the public can submit comments online or via email with the relevant proceeding number.
Senate Bill 21-264 requires investor-owned gas utilities with fewer than 90,000 customers to implement clean heat plans aimed at reducing greenhouse gas emissions statewide. This legislation set initial reduction goals for both 2025 and 2030 and tasked the PUC with setting further targets through rulemaking. It also allows the Commission to specify limits on emission reductions achieved using recovered methane after considering cost-effectiveness and public interest factors.
To protect ratepayers from excessive costs associated with implementing clean heat strategies, lawmakers established a cap so that compliance costs do not exceed an average of 2.5% of annual gas bills per utility customer. Each utility’s Clean Heat Plan must present scenarios showing how it will meet emission reduction requirements without surpassing this cost threshold.
So far, two Clean Heat Plans have been approved by the PUC; a third is under consideration.
The requirements apply specifically to three investor-owned utilities: Atmos Energy, Black Hills Energy, and Xcel Energy. Customers who do not receive service from these companies are not affected by these rules.
Utilities may use various methods to achieve their clean heat goals—including energy efficiency measures, electrification initiatives such as electric heat pumps, recovered methane usage without any maximum limit set in this rulemaking cycle, green hydrogen adoption, thermal energy systems, and pyrolysis of tires. Customers may choose to participate voluntarily through available rebates and incentives designed for home or business upgrades.
Emission reduction milestones are set at four percent by 2025; twenty-two percent by 2030; and forty-one percent by 2035 compared to baseline year emissions from 2015. Future targets beyond those years will be determined later.
All plans must involve consultation with the Colorado Department of Public Health and Environment before approval. In addition to evaluating fuel costs and direct investments related to clean heat efforts—including infrastructure changes—plans must undergo analysis considering social costs tied to carbon dioxide and methane emissions along with other relevant benefits or drawbacks.
Further information about current proceedings is available through EFilings or on puc.colorado.gov/cleanheatplans.
