Colorado law sets new community-solar credit rules and interconnection deadlines

Colorado’s enacted HB26-1225 changes how some community solar subscribers may be credited and requires new interconnection procedures at the state’s largest utilities, setting up a Public Utilities Commission implementation process that could affect project timelines, costs and contractor oversight.

The final act, titled the Advancing Grid Resilience Using Distributed Energy Resources Act, says that on and after Oct. 1, 2026, a subscriber organization may direct a qualifying retail utility to provide its income-qualified subscribers with a fixed bill credit and other subscribers with a credit that changes annually. The act also says the utility must adjust the fixed credit over time so it remains aligned with electricity-rate changes, and that the subscriber organization selects the initial fixed-credit value from one of the prior three years.

The law also changes interconnection cost timing. It says a public utility cannot require an interconnection customer to pay for reasonable and necessary interconnection facilities and upgrades until 30 days before the utility incurs those costs, though the utility may still require security for the estimated full cost when the interconnection agreement is signed.

For utilities with more than 500,000 customers, the act requires a working group by Aug. 15, 2026, to speed distributed-generation interconnection. The group must include utility staff, Public Utilities Commission staff, the Office of the Utility Consumer Advocate, trade associations and project developers. It must discuss cluster-and-batch study options, surety bonds in place of letters of credit or cash, and a process for third-party interconnection studies and upgrades. The utility must then implement that third-party process, including an approved contractor list and a way to add or remove contractors.

The law also sets guardrails for that third-party work. The utility is not liable for, and does not warranty, third-party designs or construction, but it must inspect the work, keep GIS maps current and require contractors to submit designs or as-builts within three business days. Any repair or correction costs fall on the third-party contractor, not the utility or ratepayers. The act further says third-party work must meet applicable safety, reliability, labor and technical standards, including labor requirements in state law.

The measure’s stated purpose is to speed deployment of distributed energy resources while preserving community-solar value for low-income ratepayers and protecting communities and workers. The law leaves several implementation questions unresolved, including how the Public Utilities Commission will define the fixed-credit adjustment method after the initial period, what standards large utilities will use to approve contractors, and how much the new workflow could shift costs or construction work from utility crews to outside contractors.

A Colorado General Assembly bill summary says the commission will review recommendations from the working group and that utilities must implement unanimous recommendations by Jan. 1, 2027, with other recommendations by Jan. 31, 2027. But the final act text says the utility must file recommendations with the commission by Dec. 15, 2026, and make filings to implement recommendations requiring commission approval by Jan. 1, 2027, so the timing of any commission action may depend on later filings or rulemaking.